United States ex rel. et al v. Quandel Group, Inc. et al

Filing 31

ORDER denying 24 Motion for Judgment on the Pleadings; denying 20 Motion for Judgment on the Pleadings. Therefore, the Court DENIES both Aspires motion for judgment on the pleadings (doc. 20 ); and Western Suretys motion for judgment on the pleadings (doc. 24 ). Signed by Magistrate Judge Michael J Newman on 5/21/2013. (kf)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
UNITED STATES, ex rel.,
P-1 CONTRACTING, INC., et al.,

:

Case No. 3:12-cv-418
Magistrate Judge Michael J. Newman
(Consent Case)

Plaintiffs,
vs.

:

THE QUANDEL GROUP, INC., et al.,
Defendants.

:

ORDER DENYING DEFENDANTS THE ASPIRE GROUP OF OHIO, LLC’S AND
WESTERN SURETY COMPANY’S MOTIONS FOR JUDGMENT ON THE
PLEADINGS (DOCS. 20, 24)

This is a Miller Act case brought by a supplier of labor and materials -- against a
subcontractor, the prime contractor and the prime contractor’s bonding company -- to recover
payment for services allegedly rendered.1 See 40 U.S.C. § 3131 et seq. This matter is now
before the Court upon Fed. R. Civ. P. 12(c) motions for judgment on the pleadings by
Defendants The Aspire Group of Ohio, LLC (“Aspire”) (doc. 20) and Western Surety Company
(“Western Surety”) (doc. 24); Plaintiff P-1 Contacting, Inc.’s combined memorandum in
opposition to both motions (doc. 26); Western Surety’s reply memorandum (doc. 27); and
Aspire’s reply memorandum (doc. 29).
I.
A motion for judgment on the pleadings should be granted when, taking all well-pleaded
allegations in the complaint as true, “no material issue of fact exists and the party making the
motion is entitled to judgment as a matter of law.” Tucker v. Middleburg-Legacy Place, LLC,
1

Plaintiff also brings state law claims: breach of contract; unjust enrichment; and a violation of the Ohio
Prompt Pay Act, Ohio Rev. Code § 4113.61(A)(1). The Court has supplemental jurisdiction of these
claims. See doc. 1; 28 U.S.C. § 1367. These claims are not now at issue.

539 F.3d 545, 549 (6th Cir. 2008).

Documents attached to the pleadings as exhibits are

considered incorporated therein and may be considered in evaluating a Rule 12(c) motion. See
Fed. R. Civ. P. 10(c); Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001). Accordingly,
the Court may properly consider the United States Postal Service certified mail receipt and
tracking results here at issue. See doc. 1-2.
II.
This case arises out of a construction project to renovate Building 410 at the Dayton V.A.
Medical Center. Complaint (doc. 1) ¶ 7. Aspire was the prime contractor on the project. Id. ¶ 8.
Aspire obtained a bond securing payment to the subcontractors, in accordance with the Miller
Act, from Western Surety.2 Id. ¶¶ 10-11; 40 U.S.C. § 3131. Aspire subcontracted work to
Defendant Quandel, id. ¶ 9, and Quandel, in turn, subcontracted demolition work to P-1
Contracting. Id. ¶ 12. P-1 Contracting commenced work onsite on October 12, 2011. Id. ¶ 16.
On December 19, 2011, Plaintiff stopped performing work on the project allegedly due to
Quandel’s non-payment. Id. ¶ 23.
The Miller Act imposes a notice requirement on a second-tier subcontractor, such as P-1
Contracting, which seeks recovery on a payment bond: it must provide written notice to the
prime contractor within ninety (90) days from the last day it performed work on, or supplied
services to, the project. 40 U.S.C. § 3133(b). This controlling statutory provision provides in
relevant part:

2

The Miller Act requires prime contractors on federal construction sites to post payment bonds. United
States ex rel. Interstate Mech. Contractors, Inc. v. Int’l Fid. Ins. Co., 200 F.3d 456, 459 (6th Cir. 2000).
“The payment bond provides security to persons who supply labor or materials for the project. Such
suppliers are precluded from filing liens on government facilities, and instead are granted a federal cause
of action to satisfy any deficiency in payment by the prime contractor.” Id. Accordingly, a second-tier
subcontractor (e.g., a subcontractor to a subcontractor) may seek compensation from the prime
contractor’s bond if the second-tier subcontractor does not receive payment for its services. See id.; 40
U.S.C. § 3133(b)(2).
2

A person having a direct contractual relationship with a subcontractor but no
contractual relationship, express or implied, with the contractor furnishing the
payment bond may bring a civil action on the payment bond on giving written
notice to the contractor within 90 days from the date on which the person did or
performed the last of the labor or furnished or supplied the last of the material for
which the claim is made. The action must state with substantial accuracy the
amount claimed and the name of the party to whom the material was furnished or
supplied or for whom the labor was done or performed. The notice shall be
served-(A) by any means that provides written, third-party verification of delivery to the
contractor at any place the contractor maintains an office or conducts business or
at the contractor's residence; or
(B) in any manner in which the United States marshal of the district in which the
public improvement is situated by law may serve summons.
Id. § 3133(b)(2).
The issue before the Court is a narrow one. P-1 Contracting does not dispute that it was
required to comply with the Miller Act’s 90-day notice requirement. See doc. 26. Further, the
parties agree as to the relevant facts: (1) the 90-day notice period expired on Monday, March 19,
2012;3 (2) P-1 Contracting sent written notice to Aspire by certified mail before the deadline
passed; and (3) the United States Postal Service left a notice of attempted delivery at Aspire’s
usual place of business on Thursday, March 15, 2012 (four days before the deadline), but the
certified mail was not delivered to Aspire until March 22, 2012 (three days after the deadline).
See docs. 20, 24, 26, 27, 29. Rather, the disagreement between Plaintiff and Defendants is a
legal one -- whether, accepting these agreed-upon facts, the Miller Act’s notice requirement has
been satisfied.
III.
Specifically, the question before the Court is whether the Miller Act’s notice requirement
3

P-1 Contracting last performed work on the project on December 19, 2011. Doc. 1 ¶ 28. The 90-day
deadline thereafter fell on Sunday, March 18, 2012, which was extended, under the Federal Rules of Civil
Procedure, until Monday, March 19, 2012. See Fed. R. Civ. P. 6(a)(1)(C).
3

is satisfied when the Postal Service attempts to deliver the notice to the contractor within the
statutory period, but the contractor does not receive the notice until after that period has passed.
This is an issue of first impression both within this Court and the Sixth Circuit. Aspire and
Western Surety rely on the Fourth Circuit’s opinion in Pepper Burns Insulation, Inc. v. Artco
Corp., 970 F.2d 1340 (4th Cir. 1992) to support their proposition -- that P-1 Contracting failed to
satisfy the notice requirement. See docs. 20, 24. The Fourth Circuit, in Pepper Burns, held that
actual receipt of the notice within the 90-day period is necessary to satisfy the Miller Act, and
found that merely mailing it within that window was insufficient. Id. at 1343. The Court agrees
with the Fourth Circuit’s analysis given the facts before it, but finds Pepper Burns
distinguishable from the instant case in one important respect. Here, not only was the notice
placed in the mail during the statutory period, but the Postal Service attempted to deliver it
(during business hours) four days before the statutory period expired. There is no indication of
such facts in Pepper Burns.
When a postal carrier is unsuccessful in his or her attempt to deliver certified mail, the
carrier leaves a notice of the attempted delivery at the address, and the certified mail is held at
the Post Office for the addressee. See United States Postal Service, Domestic Mail Manual
§ 508.1.1.7, available at http://pe.usps.com/text/dmm300/508.htm#1044900. Thus, having been
notified of the attempted delivery on March 15, Aspire could have retrieved its certified mail at
the Post Office that same day or Friday, March 16 or Monday, March 19 (and perhaps also on
Saturday, March 17) -- all dates within the statutory window. To that end, Aspire had some
control over whether it timely received P-1 Contracting’s notice of its claim on the payment
bond. “Beyond contravention, most adult Americans are cognizant that critical, time-sensitive
official communications are frequently dispatched via certified mail.” Graham-Humphreys v.
4

Memphis Brooks Museum of Art, Inc., 209 F.3d 552, 559 (6th Cir. 2000). With reasonable
diligence, Aspire could have received the requisite notice from P-1 Contracting within the
statutory period. In light of such facts, the Court finds that Aspire’s lack-of-timely-notice
argument is unavailing.4
In other contexts, the Sixth Circuit has rejected similar arguments -- that a party did not
timely receive the requisite notice -- when the Postal Service attempted to deliver the notice by
certified mail. See, e.g., United States v. Bolton, 781 F.2d 528, 531-33 (6th Cir. 1985) (finding
coal miners received the required notice when they refused certified letters notifying them of
their violations under the Surface Mining Control and Reclamation Act); Patmon & Young Prof’l
Corp. v. Comm’r, 55 F.3d 216, 217-18 (6th Cir. 1995) (holding that a taxpayer cannot defeat the
statutory notice requirement by refusing the certified delivery of a tax deficiency notice);
Graham-Humphreys, 209 F.3d at 558-60 (finding the limitations period -- to file a Title VII
employment discrimination claim -- automatically begins five days after the right-to-sue letter is
sent, even if the plaintiff does not actually receive the notice within the five-day window, in
cases where the Postal Service left notification of an attempted certified delivery within that time
frame).
Accordingly, the Court holds that the Miller Act’s notice requirement was satisfied in
light of the facts of this case. This finding comports with the Supreme Court’s directive to give
the Miller Act “a reasonable construction in order to effect its remedial purpose.” Fleisher
Eng’g & Constr. Co. v. United States, 311 U.S. 15, 16-19 (1940) (excusing the subcontractor’s
technical violation of the Miller Act notice requirement -- e.g., by sending the notice by regular
mail). Further, to hold otherwise would encourage parties to avoid service of the required Miller
4

There is no suggestion that the certified notice was in any manner not obvious or not found by Aspire
once delivered by the Postal Service.
5

Act notice. Cf. Friedman v. Estate of Presser, 929 F.2d 1151, 1157 (6th Cir. 1991) (finding
there is good cause to extend the time for service of process under Rule 4(m) when the defendant
has intentionally evaded service of process).5
IV.
Therefore, the Court DENIES both Aspire’s motion for judgment on the pleadings (doc.
20); and Western Surety’s motion for judgment on the pleadings (doc. 24).
IT IS SO ORDERED.
May 21, 2013

s/ Michael J. Newman
United States Magistrate Judge

5

Finally, the Court likewise finds fault with Western Surety’s arguments. The Miller Act does not
require the subcontractor give written notice to the bond company. See 40 U.S.C. § 3133(b)(2). Further,
as the Court finds Aspire was properly notified, P-1 Contracting’s Miller Act claim on the payment bond
against Western Surety remains.
6