Entitlement of contractor’s “Project Manager” to recourse under the project’s payment bond. Dickson v. Forney Enterprises, Inc. United States District Court (Eastern District of Maryland) (2021), by Hugh Anderson

Summary: Forney Enterprises entered into a contract with the federal government to repair and upgrade staircases in the Pentagon. Forney then entered into a subcontract with Dickson, a professional engineer, under which Dickson, as “Project Manager,” performed supervisory duties including coordinating deliveries, inspecting materials, making field measurements, and supervising demolition. After more than three years of the staircase work the Department of Defense terminated the contract with Forney. Forney in turn ended the subcontract with Dickson.

After the project closed down, Dickson contended that Forney owed him $442,600 for his services, and initiated a payment bond claim and lawsuit against the surety, Fidelity and Deposit Company of Maryland. The surety filed a motion for summary judgment based on the argument that Dickson had not performed “labor” as the term is used in the Miller Act and the related payment bond.

Decision: The U.S. District Court granted the surety’s motion for summary judgment, holding that Dickson had not, as a matter of law, furnished “labor” to the Pentagon staircase project. The court stated that the federal courts have concluded that:

  • the term “labor” in the Miller Act refers only to “physical toil or manual labor.”
  • “Supervisory work is generally not recoverable unless the supervisor also performs manual labor.”
  • The fact that a task is performed on the work site (which was the case with Dickson’s Pentagon work) does not assure that it is recoverable under the Miller Act.
  • “Clerical or administrative tasks even if performed at the job site, do not involve the physical toil or manual work necessary to bring them within the scope of the Miller Act.”

According to the district court, management work is clerical and excluded from the scope of the Miller Act. Taking field measurements and inspecting materials were administrative tasks that required some minor physical exertion, but did not rise to the level of physical toil needed to recover. The court expressed its concern that allowing minor physical activities at the site to bring a claimant within the protection of the Miller Act would “strip essentially all limitation” from the Miller Act’s labor requirement:

Any subcontractor (e.g., an accountant or engineer) would then be a proper claimant under the Miller Act so long as he performed his work [services] at the construction site and tidied his office on occasion.

Comment: Other federal courts have been more generous than the Dickson court in allowing Miller Act recovery for hands-on tasks such as field measurements, supervision, and inspection. However, as a general matter technical and professional services, and clerical and administrative tasks, are not “labor” for purposes of a Miller Act recovery. The Miller Act is remedial in nature, but it is not as broad in its protections as many state construction lien (mechanic’s lien) statutes; similarly some state “Little Miller” laws applicable to state and local public projects provide specific protection for a broader scope of “labor,” sometimes expressly including design services (such as those performed by a design sub on a design-build project).
The analysis of a potential Miller Act claim should always include a review of whether the underlying tasks constituted “labor” as the term has been interpreted by the courts—in addition to attention paid to meeting statutory deadlines, providing notices, and other common Miller Act issues.

The “physical toil” requirement seems straightforward but may be complicated by the transitions in construction techniques that are presently occurring. For example, is a subcontractor engaged in physical toil if its personnel direct robots or assist the construction team by flying drones?

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