Fidelity & Deposit, to the contrary, alleges that Hussmann's claim is untimely, arguing that the one-year statute began running on November 14, 1995, the date upon which the last of the Hussmann cases were delivered to C. Pyramid.
A. The Miller Act and the Act's Statute of Limitations
The Miller Act, 40 U.S.C. § 270b, provides a federal cause of action for persons supplying labor and materials upon a payment bond secured by the principal contractor of a federal government project. Section 270b provides for a one-year period within which a Miller Act must be brought. Federal courts have struggled to ascertain the precise date for running the Miller Act's one-year statute of limitations. The language of the statute provides that the proper date is "the day on which the last of the labor was performed or material was supplied." 40 U.S.C. § 270b(b). The Miller Act's original statute of limitations running mechanism was the "date of final settlement." See United States for the use of T.L. Wallace Constr., Inc. v. Fireman's Fund Ins. Co., 790 F. Supp. 680, 684 (S.D. Miss. 1992) (quoting 1959 U.S. Code Cong. & Admin. News, at 1995-2000); United States for the use of H.T. Sweeney & Son, Inc. v. E.J.T. Constr. Co., Inc., 415 F. Supp. 1328, 1330-31 (D. Del. 1976). Apparently, Congress amended the Miller Act in 1959 to adopt the performance-and-supply language to "provide 'a simple, fixed and certain method' for determining the time period within which to file suit." T.L. Wallace Constr., 790 F. Supp. at 684 (quoting 1959 U.S. Code Cong. & Admin. News, at 1996). Despite this legislative clarification, the 1959 amendment has not entirely ended the debate regarding the timing of tolling.
The Third Circuit has not spoken squarely on the requirements for the running of the Miller Act's one-year statute of limitations. There appear to be essentially two distinct methodologies among the circuits for determining the date when the Miller Act's statute of limitations begins to run: (1) upon completion of the original requirements of the contract (as opposed to completion of "corrections or repairs"), and (2) upon substantial completion of a subcontract.
1. The Majority View: Provision of the Contract v. Correction or Repair
The majority rule holds that remedial or corrective work or materials, or inspection of work already completed, does not fall within the meaning of "labor" or "materials" and will not extend the Miller Act's one-year limitations period. See, e.g., United States for the use of Magna Masonry, Inc. v. R.T. Woodfield, Inc., 709 F.2d 249, 250 (4th Cir. 1983); United States for the use of State Elec. Supply Co. v. Hesselden Constr. Co., 404 F.2d 774, 776 (10th Cir. 1968); United States ex rel. Austin v. Western Elec. Co., 337 F.2d 568, 572 (9th Cir. 1964); United States for the use of Mod-Form v. Barton & Barton Co., 769 F. Supp. 235, 238 (E.D. Mich. 1991), aff'd without opinion, 1992 U.S. App. LEXIS 14321 (6th Cir. 1982); United States for the use of Billows Elec. Supply Co. v. E.J.T. Constr. Co., Inc., 517 F. Supp. 1178, 1181 (E.D. Pa. 1981), aff'd, 688 F.2d 827 (3d Cir.), cert. denied, 459 U.S. 856, 103 S. Ct. 126, 74 L. Ed. 2d 109 (1982).
The majority rule is espoused in its most well known form in a 1964 opinion of the Ninth Circuit. In United States for the use of Austin v. Western Electric Co., 337 F.2d 568, 572-73 (9th Cir. 1964), the Ninth Circuit adopted a bifurcated test for determining when work performed or materials supplied will toll the statute of limitations under the Miller Act, and when the supply of such work or materials has no effect on the running of the statute. Id. at 572-73. The Ninth Circuit's inquiry in Western Electric Co. focused on the nature of the work performed or materials supplied to determine whether it was more properly characterized as an uncompleted requirement of the original subcontract, or as a mere correction or repair of an already performed provision of the original subcontract. Id. The court held that correction or repair materials and labor would not toll the running of the statute, but that the furnishing of labor or materials pursuant to a requirement of the original subcontract would toll the running of the statute. Id.
A majority of the circuits agree with the Ninth Circuit's correction-or-repair versus original-contract test. See United States ex rel. Luis A. Cabrera v. Sun Eng'g Enters., Inc., 817 F. Supp. 1009, 1013-15 (D.P.R.) (discussing which circuits follow Western Electric Co. test), aff'd without opinion, 10 F.3d 805 (1st Cir. 1993). The Fourth Circuit has explicitly adopted the correction-or-repair versus original-contract test. See United States for the use of Magna Masonry, Inc. v. R.T. Woodfield, Inc., 709 F.2d 249, 251 (4th Cir. 1983); see also United States for the use of Noland Co. v. Andrews, 406 F.2d 790, 792 (4th Cir. 1969) (applying the same standard to the Miller Act's 90-day notice provision for subcontractors of subcontractors of the primary contractor). In United States for the use of State Electric Supply Co. v. Hesselden Construction Co., 404 F.2d 774, 776 (10th Cir. 1968), the same bifurcated inquiry became the rule of the Tenth Circuit. See Bailey v. Faux, 704 F. Supp. 1051, 1053 (D. Utah 1989). The Eighth Circuit's approach is similar to the majority rule in substance, but asks a different question. The Eighth Circuit determines the date upon which the Miller Act statute of limitations begins by ascertaining the date upon which the subcontractor would be able to bring a valid contractual claim against the general contractor. See United States for the use of General Elec. Co. v. Gunnar I. Johnson & Son, Inc., 310 F.2d 899, 903 (8th Cir. 1962). Claims may be brought once the requirements of the original subcontract have been performed, despite the fact that subsequent remedial or corrective measures may be necessary. Thus, as a practical matter, the statute begins to run at the same time as it does under the correction-or-repair versus original-contract test. Cf. United States ex rel. Olson v. W.H. Cates Constr. Co., 972 F.2d 987, 991 (8th Cir. 1992) (stating that Miller Act does not apply unless plaintiff can show that his work was "performed . . . in connection with the completion of the project and not for the purpose of correcting defects" and citing Western Elec. Co., 337 F.2d at 572-73).
District courts in this Circuit also have applied the correction-or-repair versus original-contract test in analyzing the Miller Act's statute of limitations running mechanism. In a case predating the famous Western Electric Co. case, the Middle District of Pennsylvania adopted the majority view, stating the rationale for this view as follows:
If plaintiff could extend the time . . . by correcting a defect . . . the time for such notice might remain in chaos and depend upon the discovery of defects in construction over a year or more after completion. . . .
United States ex rel. McGregor Architectural Iron Co. v. Merritt-Chapman & Scott Corp., 185 F. Supp. 381, 383 (M.D. Pa. 1960). In United States for the use of Billows Electric Supply Co. v. E.J.T. Construction Co., 517 F. Supp. 1178, 1181 (E.D. Pa. 1981), aff'd, 688 F.2d 827 (3d Cir.), cert. denied, 459 U.S. 856, 103 S. Ct. 126, 74 L. Ed. 2d 109 (1982), the district court held that the one year time period within which a Miller Act action must be instituted is measured from the last date that the subcontractor delivered materials to the job site which were included in the original construction contract. The court refused to toll the statute simply because repair or replacement items were delivered to the job site subsequent to the date upon which all the requirements of the original contract had been met. The court also found that the burden of proving that material last delivered to the job site was included in the construction contract (and/or a change order modifying the original contract) rests with the subcontractor. The Third Circuit affirmed the decision of the lower court, albeit without opinion. At least one district court in New Jersey has adopted the test set forth in Billows Electric Supply, see United States for the use of E.J. and Sons, Inc. v. Viatech Sys., Inc., 1989 U.S. Dist. LEXIS 11153, 1989 WL 109551, *2 (D.N.J. Sept. 20, 1989), and a district court in Delaware has also followed the majority rule, United States for the use of H.T. Sweeney & Son, Inc. v. E.J.T. Constr. Co., 415 F. Supp. 1328, 1332 (D. Del. 1976).
District courts, some of which have been affirmed without opinion, in the District of Columbia Circuit, the First Circuit, the Second Circuit and the Sixth Circuit have also followed the majority rule. See United States for the use of Lank Woodwork Co. v. CSH Contractors, Inc., 452 F. Supp. 922, 924 (D.D.C. 1978); United States ex rel. Luis A. Cabrera v. Sun Eng'g Enters., Inc., 817 F. Supp. 1009, 1013-15 (D.P.R.), aff'd, 10 F.3d 805 (1st Cir. 1993); United States for the use of Air Stream Prods. Co. v. Essential Constr. Co., 363 F. Supp. 681, 682 (S.D.N.Y. 1973) ("The crucial question is not whether the final shipment is large or inconsequential, but rather whether it is made pursuant to an 'over-all contract.'"); United States for the use of T Square Equip. Corp. v. Gregor J. Schaefer Sons, Inc., 272 F. Supp. 962, 963-64 (E.D.N.Y. 1967); United States ex rel. Edwards & Co. v. Peter Reiss Constr. Co., 174 F. Supp. 264 (E.D.N.Y.), aff'd, 273 F.2d 880 (2d Cir. 1959), cert. denied, 362 U.S. 951, 4 L. Ed. 2d 869, 80 S. Ct. 864 (1960); United States for the use of Mod-Form v. Barton & Barton Co., 769 F. Supp. 235, 238 (E.D. Mich. 1991) (test requires a determination of whether the work at issue is a "correction or repair" or "something required by the original contract"), aff'd, 966 F.2d 1453 (6th Cir. 1992).
2. The Minority View: Substantial Completion
The Fifth Circuit and the Eleventh Circuit have a different test for determining when the one-year statute of limitations begins running in Miller Act cases. These jurisdictions follow the "substantial completion" rule in which the statute of limitations is not extended by insignificant work even if such work is required under the terms of the subcontract. See Johnson Serv. Co. v. Transamerica Ins. Co., 485 F.2d 164, 172 (5th Cir. 1973); General Ins. Co. v. United States, 406 F.2d 442, 443-44 (5th Cir.), reh'g denied, 409 F.2d 1326, cert. denied sub nom, United States use of Audley Moore & Son v. General Ins. Co., 396 U.S. 902, 24 L. Ed. 2d 178, 90 S. Ct. 214 (1969); Trinity Universal Ins. Co. v. Girdner, 379 F.2d 317 (5th Cir. 1967); United States for the use of T.L. Wallace Constr., Inc. v. Fireman's Fund Ins. Co., 790 F. Supp. 680, 684-85 (S.D. Miss. 1992); see also Luis A. Cabrera, 817 F. Supp. at 1013-15 (discussing Fifth and Eleventh Circuits' minority view). Substantial completion does not incorporate corrections or repairs: the minority view coincides with the majority view that remedial work does not toll the statute; however, the minority view allows the statute to run when "insubstantial" subcontract requirements have not yet been completed. See Southern Steel Co. v. United Pac. Ins. Co., 935 F.2d 1201, 1205 (11th Cir. 1991); Johnson Serv., 485 F.2d at 173; General Ins. Co. v. United States, 406 F.2d 442, 443-44 (5th Cir.), reh'g denied, 409 F.2d 1326, cert. denied sub nom. United States use of Audley Moore & Son v. General Ins. Co., 396 U.S. 902, 24 L. Ed. 2d 178, 90 S. Ct. 214 (1969).
3. Another Approach: the Georgia Electric Factors
We feel that the majority and minority views represent less of a distinct split among the circuits, and more of a difference of position along one continuum. On one end of the continuum is the strict enforcement of the repair versus original contract rule: regardless of the insignificance of the item supplied, if it is required by the original contact, its supply tolls the statute. On the other end of the spectrum is the literal application of the substantial completion test: whenever applicable contract law would deem substantial completion to have occurred, the supply of a contractually required item which the parties apparently felt was significant enough to be specifically provided for, does not toll the statute.
As a practical matter, we suspect that the majority and minority views often become conflated; the two ends of the spectrum tending to meet somewhere in the middle. A case demonstrating this is Viscount Construction Co. v. Dorman Electric Supply Co., 511 A.2d 1102, 68 Md. App. 362 (1986).
In this case, the electrical subcontractor's supplier had furnished an inverter (a device for transforming direct current into alternating current), but the inverter did not bear the contractually required Underwriter's Laboratory label of approval. Thereafter, the supplier furnished a satisfactory certificate, and the date of its delivery became the critical date. Despite the fact that delivery of the certification really just "corrected" the failure to deliver the certification earlier, the court found that, because the certification was a specified requirement under the original contract, it tolled the statute. The court's holding seems to support the repair versus original contract rule, but the court's rationale for its holding belies its consideration of the significance of the missing item notwithstanding the completion of the project: it found "the certification [to be] an absolutely essential part of the inverter," without which "the inverter is no more than a pile of useless matter. . . ." 68 Md. App. at 367, 511 A.2d at 1104.
We decline to adopt (or reject) either the majority view correction-or-repair versus original-contract test or the minority view substantial completion test. Instead, we gain assistance in making our statute of limitations determination by looking to a different methodology we feel nicely reflects the factors courts often consider while applying both the majority and minority views. Another approach, bearing similarities to both the majority view and the minority view (and thus supporting our continuum theory), is presented in United States ex rel. Georgia Electric Supply Co. v. United States Fidelity & Guaranty Co., 656 F.2d 993 (5th Cir.1981). In this case, ballasts had been mistakenly omitted from the fluorescent lighting fixtures that had been installed in the project. Subsequently, the electrical subcontractor's supplier furnished the ballasts, and that date of delivery became the critical date for notice purposes. In the trial court a jury found for the plaintiff supplier, and the Fifth Circuit affirmed on that aspect of the case, after calling the issue "a close question." Id. at 996. The court advanced the following rationale:
The line drawn by this Court and in other jurisdictions, whether the materials were furnished for repairs or as part of the original contract, is admittedly hazy. As we noted in an earlier decision: 'Each case must be judged on its own facts and . . . sweeping rules about "repairs" offer little help in the necessary analysis.' The factors to consider include the value of the materials, the original contract specifications, the unexpected nature of the work, and the importance of the materials to the operation of the system in which they are used.
Id. (quoting Johnson Serv. Co., 485 F.2d at 173). This approach was also followed in Southern Steel Co. v. United Pacific Insurance Co., 935 F.2d 1201, 1205 (11th Cir. 1991), where the Court applied the Georgia Electric factors to find that summary judgment on the statute of limitations issue was inappropriate because the subcontractor deserved an opportunity to show that reworked locks supplied after project completion were needed as a result of faulty design or installation by a third party, not his own negligence. Id.
4. Application of the Georgia Electric Factors
As an initial matter, we note that Hussmann admits that the as-built final drawings were "duplicates of the initial shop drawings submitted by Hussmann at the outset of the Purchase Order." Supp. Smith Aff. at P 20. As such, we cannot consider the delivery of such duplicates on September 16, 1996 for purposes of tolling the Miller Act one-year limitations period. Thus, we focus only on the O&M manuals delivered on that same date.
We now analyze the significance of the delivery of the O&M manuals under the Georgia Electric factors. The first Georgia Electric factor looks to the value of the materials. Here, the parties agree that the value of the O&M manuals is $ 5,000. Fidelity & Deposit claim that $ 5,000 is a trivial sum in comparison to the overall contract price of $ 700,000. We disagree. Although the $ 5,000 value of the O&M manuals represents only a small proportion of the overall contract price, $ 5,000 is still a significant amount of money. One recent Eastern District of Pennsylvania court, although not directly dealing with when to begin the Miller Act's running mechanism, has implied that punch-list items and as-built final drawings valued at $ 392 could be recovered under the Miller Act. United States for the use and benefit of Joseph P. Sulzbach, Inc. v. Cottman Mechanical Contractors, Inc., 1993 U.S. Dist. LEXIS 18058 (E.D. Pa. Dec. 21, 1993). To be deemed too insignificant to constitute "materials" for statute of limitations purposes, the items would have to be valued at much less than $ 5,000. See United States ex rel. Edwards & Co. v. Peter Reiss Constr. Co., 174 F. Supp. 264 (E.D.N.Y.) (delivery of switch valued at $ 15.90 not sufficient to be deemed materials for purposes of beginning the running of the Miller Act's 90-day notice period where total goods delivered under subcontract worth $ 10,766.27), aff'd, 273 F.2d 880 (2d Cir. 1959), cert. denied, 362 U.S. 951, 4 L. Ed. 2d 869, 80 S. Ct. 864 (1960). Thus, the first factor weighs in favor of beginning the one-year period from Hussmann's September 16, 1996 date.
The second factor looks to the original contract specifications. Here, government specification number 15688, § 1.06, incorporated on the first page of the Purchase Order, specifically provides for the provision of operating and maintenance instruction manuals. It is clear from the definition of § 1.06 that the manuals are relatively minor items of user instruction, intended to provide DeCA with operating and maintenance assistance for Hussmann's standard-type refrigeration equipment post-job completion. Although the definition of the operating instructions under § 1.06 demonstrates how dissimilar the manuals are to actual "materials supplied in prosecution of the work," 40 U.S.C. 270b(a), their specific reference in the Purchase Order leans in favor of Hussmann's September 16, 1996 date.
The third factor, the "unexpected nature of the work," normally assists the court in determining whether the materials were more like repair items than original-contract items. Here, we are not convinced by Fidelity & Deposit's argument that the O&M manuals were repair-related items provided only to correct defects in the already installed Hussmann equipment. See Fidelity & Deposit Reply Br. at 9-10. Simply because a certain item contains instructions for repairing equipment does not mean that the item itself is a repair-item. To the contrary, instructions for operation and repair can be integral parts of a materials contract and their supply can be quite significant, even in terms of determining the proper statute of limitations date. See U.S. for Use of Joseph T. Richardson, Inc. v. E.J.T. Const. Co., Inc., 453 F. Supp. 435, 440 (D. Del. 1978) (hanging in dining hall of framed sequence of operations for environmental control system was part of original completion of dining hall project for Miller Act purposes so that performance of such labor within one year of bringing suit under Miller Act rendered claims under Act for work and materials supplied in connection with such project timely). Here, the delivery of the manuals was specifically provided for in the contract and Hussmann was obligated to deliver the manuals whether or not they were necessary to repair an "unexpected" equipment problem. Thus, by virtue of the terms of the contract and the manuals importance to those operating and repairing the system, we find that the manuals were an "expected" item. The third factor therefore weighs in favor of Hussmann's September 16, 1995 date.
The final factor, the importance of the materials to the operation of the system in which they are used, also supports Hussmann's September 16, 1996 date. Here, C. Pyramid itself admits, through its numerous letters to Hussmann demanding delivery of the manuals, that it considered the O&M manuals to be important. On July 16, 1996, Muller stated "it is now approximately 45 days prior to completion of our contractual work and therefore we request that all manuals and operating instructions etc. as per Spec. sect. 15688-4 Par A. and B. be submitted." Exh. G to Supp. Smith Aff. On July 18, 1996, Craddock wrote: "Your refusal to provide O&M Manuals and training as set forth in the contract due to a dispute over cost and backcharges or trying to force us to settle under your terms will not be tolerated by [C. Pyramid]." Exh. I to Supp. Smith Aff. On September 9, 1996 Craddock again demanded the manuals: "It is strongly recommended that you complete all your contractual obligations ASAP in order that the government acceptance takes place." Exh. L to Craddock Aff. We feel these letters speak for themselves. Also revealing of C. Pyramid's view of the importance of the manuals is the fact that they based their refusal of payment on the fact that the manuals had not yet been delivered. Furthermore, C. Pyramid could not obtain government approval until the manuals had been delivered. Therefore, we feel the manuals were important to the operation of the system and therefore find that the final factor weighs in favor of the September 16, 1996 date.
Because we find that all of Georgia Electric factors clearly weigh in favor of running the one-year limitations period from Hussmann's September 16, 1996 date, we hold that Hussmann's claim is timely. Hussmann has therefore satisfied the fourth element, meeting the jurisdictional requirements, necessary to maintain a Miller Act claim.
B. Satisfaction of the Other Three Elements of a Miller Act Claim
Having determined that Hussmann's Miller Act claim is timely, we must now proceed to an analysis of its satisfaction of the other three elements necessary to succeed on a Miller Act claim:
(1) the materials were supplied in prosecution of the work provided for in the contract;
(2) the materialman has not been paid; and