United States ex rel. Sunworks Division of Sun Collector Corp. v. Insurance Co. of North America

695 F.2d 455, 30 Cont. Cas. Fed. 70,497, 1982 U.S. App. LEXIS 24089
CourtCourt of Appeals for the Tenth Circuit
DecidedNovember 15, 1982
DocketNo. 81-1005
StatusPublished
Cited by19 cases

This text of 695 F.2d 455 (United States ex rel. Sunworks Division of Sun Collector Corp. v. Insurance Co. of North America) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit 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. Sunworks Division of Sun Collector Corp. v. Insurance Co. of North America, 695 F.2d 455, 30 Cont. Cas. Fed. 70,497, 1982 U.S. App. LEXIS 24089 (10th Cir. 1982).

Opinion

SEYMOUR, Circuit Judge.

Sunworks Division of Sun Collector Corporation (Sunworks) brought suit against Fortec Constructors (Fortec)1 and others, seeking payment for materials furnished for use on a federal construction project. As alternative grounds for relief, Sunworks claimed it was entitled to recover either under the provisions of the Miller Act, 40 U.S.C. §§ 270a-270d (1976), or under the principle of quantum meruit. After a bench trial on the merits, the district judge dismissed the action, concluding that Sunworks had failed to file timely notice of its claim as required by the Miller Act.2 The judge did not address the quantum meruit issue. On appeal, Sunworks has abandoned its Miller Act claim, arguing instead that the trial court should have considered the alternative unjust enrichment theory.3 We agree and therefore reverse.

The Army Corps of Engineers contracted with Fortec, as general contractor, to construct an Armed Forces Reserve Center in Albuquerque, New Mexico. Fortec executed a payment bond with defendant Insurance Company of North America in compliance with the Miller Act, 40 U.S.C. § 270a(a)(2).4

Fortec entered into a subcontract with defendant Weleo Mechanical Contractors (Weleo), in which Weleo agreed to procure and install operative solar collectors. Weleo in turn contracted with Sunworks to supply the solar collectors.5 Sunworks completed delivery of the collectors to the project in January 1979. Unbeknown to Sunworks, Weleo walked off the project in February [457]*457before installing the collectors. Fortec then hired another subcontractor to install them.6

Welco had arranged to pay Sunworks with three sight drafts. Sunworks presented the drafts for payment in May when it was informed that the collectors had been satisfactorily installed. However, the drafts were not honored. Sunworks notified Fortec of Welco’s nonpayment in July 1979. Welco has filed a voluntary bankruptcy petition in Mississippi.

Sunworks argues that the trial judge erroneously dismissed the alternative claim against Fortec for the value of the operative solar collectors incorporated into the project by Fortec. This quantum meruit theory of relief is not based on the provisions of the Miller Act, but on principles of common law. Implicit in the district court’s dismissal is its conclusion that Sunworks must recover under the provisions of the Miller Act or not at all. We agree with Sunworks that this conclusion is erroneous. Recovery under the Miller Act is not a supplier’s exclusive remedy against a general contractor.

The Miller Act provides in pertinent part that:

“Before any contract, exceeding $2,000 in amount, for the construction, alteration, or repair of any public building or public work of the United States is awarded to any person, such person shall furnish to the United States the following bonds, which shall become binding upon the award of the contract to such person, who is hereinafter designated as ‘contractor’: U
“A payment bond with a surety or sureties satisfactory to such officer for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person.”

40 U.S.C. § 270a(a)(2).

“Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished under sections 270a to 270d of this title and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him if

40 U.S.C. § 270b(a) (emphasis added). Thus, the Act permits an unpaid supplier who complies with the Act’s provisions to recover from a payment bond the amount owed him.

The Supreme Court has explained that “the Miller Act was designed to provide an alternative remedy to the mechanics’ liens ordinarily available on private construction projects.. .. Because ‘a lien cannot attach to Government property,’ persons supplying labor or materials in a federal construction project were to be protected by a payment bond.” J.W. Bateson Co. v. Board of Trustees, 434 U.S. 586, 589, 98 S.Ct. 873, 875, 55 L.Ed.2d 50 (1978) (quoting F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 122, 94 S.Ct. 2157, 2161, 40 L.Ed.2d 703 (1974)) (emphasis added) (citation omitted). Consequently, the nature of mechanics’ liens is relevant to the question whether the Miller Act is an exclusive remedy.

“A mechanic’s lien is a right of a supplier of labor or materials to obtain recourse against real estate improved by the labor or materials in the event that payment for the labor or materials is not made.” Scherer Hardware & Supply, Inc. v. Charles H. Eichel Kraut & Son (In re [458]*458Scherer Hardware & Supply, Inc.), 9 B.R. 125, 130 (Bkrtcy.N.D.Ill.1981). Thus a supplier who can resort to a mechanic’s lien is in a position analogous to that of a secured creditor who is able to satisfy a debt by recourse to specified property. A supplier who for some reason is unable to avail himself of a mechanic’s lien is comparable to a general creditor because he cannot satisfy his claim out of designated property. In essence, he has no security for the amount owed him.

A mechanic’s lien is a statutorily created remedy supplemental to other statutory or common law remedies, see, e.g., In re Warren, 192 F.Supp. 801, 804 n. 4 (W.D.Wash. 1961); Welling v. American Roofing & Sheet Metal Co., 617 P.2d 206, 209-10 (Okl. 1980). “Enforcement of a mechanics' lien is not the exclusive remedy in regard to the obligation which such lien secures,” 53 Am. Jur.2d Mechanics’ Liens § 340 (1970), but is “separate from and independent of any in personam rights ... which the supplier might have against the owner, a contractor, or a subcontractor, by way of contract or otherwise.” In re Scherer Hardware, 9 B.R. at 130; see 53 Am.Jur.2d Mechanics’ Liens § 340. New Mexico specifically provides that the right to a mechanic’s lien created by state statute shall not “be construed to impair or affect the right of any person to whom any debt may be due for work done or materials furnished to maintain a personal action to recover such debt against the person liable therefor.” N.M. Stat.Ann. § 48-2-16 (1978).

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United States v. Insurance Company Of North America
695 F.2d 455 (Tenth Circuit, 1982)

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Bluebook (online)
695 F.2d 455, 30 Cont. Cas. Fed. 70,497, 1982 U.S. App. LEXIS 24089, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-sunworks-division-of-sun-collector-corp-v-insurance-ca10-1982.