The opinion of the court was delivered by: Wexler, District Judge.
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
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:
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.
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 account.
4. Copies of all correspondence. . . .
While awaiting these documents we shall initiate our
investigation by contacting DCI . . . to determine
If this matter has been or is in the process of being
resolved, we would appreciate your notifying us.
. . . We specifically reserve any and all rights
available under the provisions of the Miller Act
relating to suit limitations.
Moreover, by letter dated September 27, 1989, Levesque advised
Fechner that he had not yet received word on DCI's position as
to B & B's claim, and reminded Fechner that Reliance's position
was that any claim by B & B against Reliance was barred by the
Miller Act's statute of limitations. Levesque again reiterated
this in a letter to Fechner dated November 6, 1989. In the
November 6 letter, Levesque also indicated that the June 28,
1989 meeting between Reliance and B & B was not scheduled for
the purpose of resolving the claim, but was part of Reliance's
investigation into DCI's obligations following termination of
DCI by BNL. Nevertheless, as noted above, this action was not
commenced until January 23, 1990.
Reliance maintains that the last day on which B & B performed
labor or supplied material on the BNL Project was actually March
1, 1988, but in no event was it later than June 2, 1988, the
date that B & B completed punch list work, i.e., work to
repair or correct defects in original work. Reliance refers the
Court to a letter dated August 5, 1989 from B & B's president,
Robert Benza ("Benza"), to DCI's vice-president, Dennis Nemick
("Nemick"), which reads in part:
Both of the punch lists referred by you were
acknowledged by B & B, and work was completed and
accepted by Mr. Bill Britz of BNL, as the work was
performed in his presence. Please reference our Daily
Job Report, dated June 2, 1988. . . .
We have enclosed a copy of BNL's punch list, dated
May 20, 1988, with an explanation next to each item.
It is clear that we have completed our contract in a
respectable manner. [Emphasis added].
The Court notes that B & B failed to provide any support for
the allegation in the complaint that the last day labor was
performed was June 30, 1988. Reliance therefore contends that
this action is unquestionably barred by the one-year statute of
limitations. Apparently, Reliance
maintains that there can be no estoppel under these
circumstances since the facts allegedly supporting the estoppel
occurred no earlier than June 23, 1989, more than one year after
completion of any work (original work or punch list work) by B &
B. Nevertheless, Reliance denies that it in any way misled B & B
into believing that it was going to pay the claim.
However, at oral argument on June 19, 1990, Fechner argued
that B & B had in fact continued to perform labor under its
contract with DCI until sometime in August 1988, and produced a
letter dated December 29, 1988 from Benza to Nemick wherein
We are in receipt of your latest punch list which is
dated 11-21-88. Please be advised all item's [sic] on
the list were previously addressed in our letter to
you on 8-5-88. . . . It clearly show's [sic] what our
position on each of these item's [sic] are [sic].
Once again, the only item which would possibly
require our attention would be the protection
bollard, [sic] — which are in our shop waiting to be
installed. We would install them only if you paid
[sic] B & B Welding its monies, which you have
received and in effect have stolen from us.
In light of Fechner's representation to the Court and of the
December 29 letter, the parties were permitted to submit
supplemental affidavits and briefs on the motion.
In its supplemental papers, B & B contends that the protection
bollards (which, according to the papers, are also known as pipe
bumpers) were part of the contract between it and DCI, and that
labor was performed in preparing the bollards for the BNL
Project as late as August 12, 1988, notwithstanding the bollards
were neither delivered to the job site nor used in the actual
prosecution of the work. B & B offers records purportedly
indicating that work was done on August 3, 4, and 12, 1988 by B
& B vice-president Michael Husband ("Husband") in procuring and
preparing the bollards for the BNL Project.*fn3
Reliance, on the other hand, maintains that DCI was unaware
that B & B had the bollards until it received the December 29,
1988 letter from Benza, and that DCI had purchased bollards
elsewhere in reliance on the assertion in the August 5, 1988
letter from Benza that B & B had completed its work under the
contract. Reliance argues that B & B should be estopped from
maintaining that it continued to perform work under the contract
in procuring and preparing the bollards (purchasing,
galvanizing, etc.). In addition, Reliance suggests that work
billed by Husband on August 3 and 4, 1988 could have been in
preparing the August 5, 1988 letter from Benza to Nemick rather
than in preparing the bollards. Further, Reliance points out
that certain work allegedly done on the bollards, specifically,
the galvanizing of the bollards, was not even called for in the
contract, indicating that the bollards were not for the BNL
As noted above, B & B's estoppel argument is based on
representations by Reliance to B & B which occurred no earlier
than June 23, 1989. Thus, only if the last day of performance
was on or after June 23, 1988 can B & B even raise the estoppel
issue. Hence, one potential issue is whether B & B should be
allowed to maintain that the last day of performance (the date
the statute of limitations began to run) was August 12, 1988,
notwithstanding B & B had previously told DCI (by the August 5,
1988 letter) that it had completed performance under the
contract. As discussed below, the Court need not address this
issue because the Court finds that B & B has not raised a
genuine issue of material fact to support its claim of equitable
estoppel even if it is assumed that the last day of performance
was August 12, 1988.
In the context of actions brought under the Miller Act, the
doctrine of equitable estoppel has been stated as follows:
"Estoppel arises where one, by his conduct, lulls
another into a false security, and into a position he
would not take only because of such conduct.
Estoppel, in the event of a disputed claim, arises
where one party by his words, acts, and conduct led
the other to believe that it would acknowledge and
pay the claim, if, after investigation, the claim
were found to be just, but when, after the time for
suit had passed, breaks off negotiations and denies
liability and refuses to pay."
United States ex rel. Nelson v. Reliance Ins. Co.,
436 F.2d 1366, 1370 (10th Cir. 1971) (quoting McWaters & Bartlett v.
United States ex rel. Wilson, 272 F.2d 291, 296 (10th Cir.
1959)); United States ex rel. Humble Oil & Ref. Co. v. Fidelity
& Casualty Co., 402 F.2d 893, 897 (4th Cir. 1968) (same).
Though the Tenth Circuit in McWaters & Bartlett v. United
States ex rel. Wilson, 272 F.2d 291 (10th Cir. 1959), stated
further that "[t]o constitute estoppel there must be deception
relied upon by the other to his detriment," id. at 296, the
Fourth Circuit in Humble Oil held that actual fraud or
deception need not be shown, see Humble Oil & Ref. Co., 402
F.2d at 898. As the Fourth Circuit held, estoppel requires a
"representation, reliance, change of position and detriment."
Assuming that B & B's last day of performance under its
contract with DCI was August 12, 1988, the statute of
limitations on its claim against Reliance would have expired on
August 12, 1989 unless Reliance is estopped from asserting the
limitations period as a defense because of representations it
made to B & B. B & B contends that it need not show actual
fraud, but only that Reliance, by its statements or conduct,
misled B & B to its detriment. Even accepting B & B's statement
of the rule, B & B has failed to establish a genuine issue of
material fact supporting its claim of equitable estoppel.
A review of the record reveals that even assuming
representations by Reliance to Fechner on June 23 and 30 misled
B & B into believing that Reliance would acknowledge and pay B &
B's claim, the August 14, 1989 letter from Levesque to Fechner
should have made clear to B & B that that was not Reliance's
position. The letter itself contained no representations or
promises which might reasonably be expected to have induced
Fechner's or B & B's reliance. See General Ins. Co. v. United
States ex rel. Audley Moore & Son, 406 F.2d 442, 444 & n. 5
(5th Cir.), cert. denied, 396 U.S. 902, 90 S.Ct. 214, 24
L.Ed.2d 178 (1969). Rather, the letter might reasonably be
expected to have caused Fechner and B & B to question their
purported reliance on earlier representations by Reliance.
Moreover, the letters of September 27 and November 6, 1989 from
Levesque to Fechner, if anything, further detract from any claim
by B & B that Reliance led it to believe that its claim would be
acknowledged and paid. B & B alleges that it was not aware until
November 6, 1989 that its claim would not be paid despite the
fact that Reliance notified B & B in the August 14 letter that
it was reserving its rights under the Miller Act, and, in the
September 27 letter, that it believed the claim was already
barred by the statute of limitations. The November 6 letter, on
which B & B apparently relies, essentially reiterated Levesque's
statements in the September 27 letter. Even if the limitations
period was tolled beginning the last week in June 1989,
approximately one and one-half months before it would have
expired on August 12, 1989, B & B clearly could not have
justifiably relied on Reliance's representations in foregoing
suit until January 1990. Without implying that suit must
necessarily be brought within some particular time if a
plaintiff is to successfully invoke the estoppel doctrine, this
Court finds that B & B waited too long to commence this action
from the time it should reasonably have become apparent that
Reliance was neither representing or promising that it would
acknowledge and pay the claim.
In addition, this Court has difficulty in accepting B & B's
contention that the alleged statement by Brotherston on June 23,
1989, that B & B make available someone with signatory authority
for the June 28 meeting, justifies its delay in filing suit. As
noted above, no check was issued at the meeting; nor is there
acknowledgment of the claim and payment were to be forthcoming.
Levesque's suggestion to Fechner, in their June 30, 1989
conversation, that B & B file a formal claim against the bond,
is far from indicating an assurance by Reliance that it would
acknowledge and pay the claim. Nor does the July 18, 1989 letter
from Fechner to Levesque, which served as B & B's formal claim
against the bond, indicate that Fechner understood any earlier
representations by Levesque as assurances that Reliance would
acknowledge and pay the claim.
Based on the reasons above, B & B's claim is barred by the
Miller Act's one-year statute of limitations. B & B has failed
to raise a genuine issue of material fact supporting its claim
that Reliance be estopped from asserting the statute of
limitations as a defense. Accordingly, Reliance's motion for
summary judgment is granted, and the complaint is dismissed. The
Clerk of the Court is directed to close the file in this case.