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U.S. FOR USE OF B & B WELDING v. RELIANCE INS. CO.

August 3, 1990

UNITED STATES OF AMERICA FOR THE USE OF B & B WELDING, INC., PLAINTIFF,
v.
RELIANCE INSURANCE COMPANY OF NEW YORK, DEFENDANT.



The opinion of the court was delivered by: Wexler, District Judge.

MEMORANDUM AND ORDER

Use-plaintiff B & B Welding, Inc. ("B & B") brings this action under the Miller Act, 40 U.S.C. § 270b, against defendant Reliance Insurance Company of New York ("Reliance"), the surety on a payment bond on a contract entered into between the United States and Danaco Contractors, Inc. ("DCI"), as general contractor, for the construction of a chilled water facility at Brookhaven National Laboratory ("BNL") in Brookhaven, New York ("the BNL Project"). B & B seeks to recover amounts owed it by DCI for materials and labor furnished on the BNL Project as a subcontractor for DCI. Presently before the Court is Reliance's motion for summary judgment*fn1 on the ground that the action is barred by the Miller Act's one-year statute of limitations. See 40 U.S.C. § 270b(b). For the reasons below, the motion is granted.

I. Background

The complaint alleges that DCI and the United States entered into their contract sometime prior to June 28, 1987. In addition, upon entering the contract with the United States, DCI, as principal, and Reliance, as surety, delivered to the United States a payment bond guaranteeing payment to suppliers of material and labor in the prosecution of the BNL Project. Thereafter, on or about June 28, 1987, B & B entered into a contract with DCI to provide labor and materials for the project. The work B & B agreed to complete included, inter alia, the structural steel and metal roof and door decks. B & B alleges that it completed performance under the contract but that DCI still owes it $97,441.83.*fn2 Because DCI has failed to pay the amount allegedly due under the contract, B & B seeks to recover from Reliance as surety on the payment bond. B & B also states that it has satisfied all conditions precedent to bringing this action.

The complaint alleges that the date on which B & B last supplied labor or material was June 30, 1988. This action was commenced on January 23, 1990, nearly nineteen months later. Section 270b(b) of the Miller Act, however, provides:

  Every suit instituted under this section shall be
  brought in the name of the United States for the use
  of the person suing, in the United States District
  Court for any district in which the contract was to
  be performed and executed . . ., but 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 by [such
  person]. . . .

40 U.S.C. § 270b(b). It is apparent that based on the allegations in the complaint, this action is not timely. Faced with a statute of limitations defense, B & B argues that statements and representations made by representatives of Reliance to B & B's attorney, Lawrence Fechner ("Fechner"), on June 23 and 30, 1989, and thereafter, caused B & B to delay commencing this action. Hence, B & B argues that Reliance should be estopped from asserting the Miller Act's statute of limitations as a defense.

In support of its estoppel argument, B & B contends that on June 23, 1989, Fechner spoke to George Brotherston ("Brotherston"), who was hired as a consultant by Reliance, in an attempt to resolve B & B's claim against DCI. By affidavit, Fechner states that Brotherston had set up a meeting at the BNL job site for June 28, 1989 between Reliance and representatives of B & B, and had requested that someone from B & B with signatory authority be present at the meeting "since checks would be issued at that time in settlement of existing claims." Affidavit of Lawrence Fechner dated March 28, 1990, para. 12. However, at the June 28 meeting no checks were issued in settlement of the claim. Fechner was told the next day, June 29, 1989, that B & B had not been paid at the June 28 meeting. Id. para. 14.

On June 30, 1989, Fechner spoke to Rick Levesque ("Levesque"), an attorney in Reliance's bond claim department, who suggested to Fechner that he file a formal claim against the bond on behalf of B & B. Id. para. 16. Consequently, by letter dated July 18, 1989, Fechner submitted B & B's formal claim to Levesque. Id. ex. D. In response, by letter to Fechner dated August 14, 1989, Levesque stated:

  This will confirm receipt of your July 18, 1989
  correspondence wherein you presented a claim in the
  amount of $113,655.83 against the . . . [payment]
  bond. To facilitate our investigation of your claim
  we request that you supply the following:

1. Copy of the subcontract and/or purchase order.

2. Invoices and delivery receipts.

3. A statement of ...


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