United States v. George Hyman ( 1997 )


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  • USCA1 Opinion








    UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT

    ____________________

    No. 97-1577

    UNITED STATES OF AMERICA FOR THE USE AND,
    BENEFIT OF WATER WORKS SUPPLY CORPORATION,

    Plaintiff, Appellee,

    v.

    GEORGE HYMAN CONSTRUCTION COMPANY,
    NATIONAL UNION FIRE INSURANCE COMPANY OF
    PITTSBURGH, P.A., FEDERAL INSURANCE COMPANY
    AND SEABOARD SURETY COMPANY,

    Defendants, Appellants.

    ____________________

    APPEAL FROM THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF MASSACHUSETTS

    [Hon. Patti B. Saris, U.S. District Judge] ___________________

    ____________________

    Before

    Torruella, Chief Judge, ___________

    Campbell, Senior Circuit Judge, ____________________

    and Boudin, Circuit Judge. _____________

    ____________________

    Steven J. Comen, with whom Jeremy M. Sternberg, Dori C. ________________ ____________________ ________
    Gouin, Howard J. Hirsch and Goodwin, Procter & Hoar LLP were on _____ ________________ ____________________________
    brief for appellant, The George Hyman Construction Company.
    Bert J. Capone, with whom CharCretia V. DiBartolo and _______________ _________________________
    Cetrulo & Capone were on brief for appellant, National Union Fire ________________
    Insurance Company of Pittsburgh, PA; Federal Insurance Company
    and Seaboard Surety Company.
    Gary H. Kreppel for appellee. _______________
    ____________________
    December 10, 1997
    ____________________















    CAMPBELL, Senior Circuit Judge. Defendant- _______________________

    appellant George Hyman Construction Company ("Hyman") appeals

    from the district court's judgment awarding recovery to the

    Water Works Supply Corporation ("Water Works") under the

    Miller Act, 40 U.S.C. 270a-270d (1986) (the "Miller Act"

    or the "Act"). Hyman makes a number of arguments as to why

    the district court erred in allowing recovery. In this

    opinion we concentrate particularly on Hyman's contentions:

    (1) that Water Works did not satisfy the Act's ninety-day

    notice requirement; and (2) that Water Works did not have a

    sufficiently close relationship to Hyman to qualify for

    recovery under the Miller Act. Finding no merit in these or

    in the other arguments that Hyman advances, we affirm.



    I. BACKGROUND.

    The facts are largely undisputed. Hyman was the

    general contractor on a $70 million federal construction

    project to build a mail processing center in Waltham,

    Massachusetts (the "Post Office Project" or the "Project").

    Pursuant to the requirements of the Miller Act, Hyman

    obtained a payment bond from National Union Fire Insurance

    Company of Pittsburgh, PA, Federal Insurance Company, and

    Seaboard Surety Company (collectively, the "Sureties"). On

    or about September 16, 1994, Hyman entered into an oral

    agreement with Calvesco, Inc. ("Calvesco"), wherein Calvesco



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    promised to serve as demolition, excavation and site work

    subcontractor for the Post Office Project.

    On September 16, 1994, the same day that Hyman

    hired Calvesco, Calvesco submitted an application for credit

    to Water Works, a purveyor of pipe and piping materials.

    Water Works extended an unlimited line of credit to Calvesco.

    Calvesco was working on at least three projects at that time,

    and the credit application did not indicate whether it was

    for a particular project.

    Subsequently, Calvesco informed Hyman that it could

    not legally serve as subcontractor on the Post Office Project

    because it was a non-union shop. On September 27, 1994,

    Hyman and Calvesco agreed to replace Calvesco with Iron

    Holdings, Inc. d/b/a Charles A. Jackson Co. ("Jackson"), a

    unionized company created by the principals of Calvesco.

    On October 11, 1994, Jackson notified Water Works

    that it had replaced Calvesco as subcontractor on the Post

    Office Project. Jackson requested that it, rather than

    Calvesco, receive Water Works's invoices. Because Water

    Works had extended credit only to Calvesco and not to

    Jackson, Water Works refused to supply Jackson unless

    Calvesco executed a corporate guarantee. Until the corporate

    guarantee could be signed, Water Works agreed to ship piping

    materials to the Post Office Project site at Jackson's

    request and to send the invoices to Calvesco. That same day,



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    Jackson placed an order for pipe. Water Works shipped the

    material to "Charles A. Jackson Co., c/o Calvesco." Water

    Works sent the invoice to "Calvesco, Inc. Attn: Jackson

    Gateman, Treas." ("Gateman").

    From early October through December 29, 1994, Water

    Works filled seven purchase orders relating to the Post

    Office Project. Water Works continued to ship materials to

    the Post Office Project site and to send the invoices to

    Gateman at Calvesco. Jackson paid for five of the seven

    shipments; the other two invoices remain unpaid and are the

    subject of this action. The first unpaid invoice, for

    $53,493.83 and dated November 30, 1994, corresponded to an

    order placed on November 1, 1994 by Lou Ingegneri, the Post

    Office Project manager for Jackson. The second unpaid

    invoice, for $157.76 and dated January 12, 1995, related to

    the last delivery made by Water Works to the Project, which

    occurred on December 29, 1994. This second invoice does not

    indicate the name of the person placing the order.

    During January and February of 1995, Water Works's

    credit manager Stanley Wernick ("Wernick") conversed on the

    telephone with several employees of Hyman about the

    outstanding November and December invoices. On March 7,

    Wernick sent a demand letter to Calvesco. Wernick also sent

    a copy of this letter to Hyman and the Sureties. Hyman

    responded to Wernick's communications in writing on March 22



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    by indicating that it had turned the matter over to its

    attorneys and was not paying any claims until it had a clear

    picture of its options.

    On April 5, 1995, Water Works filed suit in

    Middlesex County Superior Court against Calvesco and its

    personal guarantor for monies owed on several jobs, including

    the Post Office Project. This state court suit resulted in a

    settlement in which Calvesco agreed to pay Water Works for

    the cost of its materials. Calvesco has not satisfied this

    judgment.

    On the same day that Water Works filed its state

    action, it also filed a one-count Miller Act complaint

    against Hyman and the Sureties in the United States District

    Court for the District of Massachusetts. The district court

    consolidated Water Works's federal action with twenty-five

    other actions brought against Hyman arising from the Post

    Office Project in order to determine issues of fact and law

    common to all the claimants. The district court found that

    Calvesco and Jackson were separate corporate entities, and

    that Calvesco was Hyman's subcontractor from September 16,

    1994 through September 27, 1994, with Jackson serving as

    subcontractor thereafter.

    Water Works argued to the district court that it

    was in a direct contractual relationship with Calvesco during

    the period of time when Calvesco was Hyman's direct



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    subcontractor. The district court rejected this argument,

    finding that the credit application between Water Works and

    Calvesco did not constitute a contract.

    Nevertheless, the court held that Water Works could

    recover under the Miller Act. Finding that Water Works had

    satisfied the 90-day notice requirement in the Miller Act,

    the court held that Water Works could recover from the

    payment bond on the amount owed for its November order under

    two alternative theories. First, Jackson had an open account

    with Water Works. Second, Water Works could recover under

    the doctrine of quantum meruit.

    The district court allowed Water Works to recover

    the amount of its November shipment -- $53,493.83, plus costs

    and interest -- but not the amount of its December shipment -

    - $157.76. The key distinction between the two orders, in

    the court's view, was that the November order was signed by

    Jackson's project manager, whereas the December order, being

    unsigned, could not be plainly attributed to Jackson.



    II. STANDARD OF REVIEW.

    We review de novo questions of statutory __ ____

    interpretation that present pure questions of law. See Riva ___ ____

    v. Commissioner of Mass., 61 F.3d 1003, 1007 (1st Cir. 1995). _____________________

    The sufficiency of notice under the Miller Act, to the extent

    based on undisputed facts, is commonly reviewed de novo. __ ____



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    See United States ex rel. Consol. Elec. Distribs., Inc. v. ___ ______________________________________________________

    Altech, Inc., 929 F.2d 1089, 1092 (5th Cir. 1991); United ____________ ______

    States ex rel. Moody v. American Ins. Co., 835 F.2d 745, 748 ____________________ _________________

    (10th Cir. 1987). We uphold a district court's factual

    findings unless they are clearly erroneous. See Fed. R. Civ. ___

    P. 52(a); United States ex rel. Calderon & Oyarzun, Inc. v. ________________________________________________

    MSI Corp., 408 F.2d 1348, 1348 (1st Cir. 1969). _________



    III. DISCUSSION.

    A. The Statutory Scheme of the Miller Act. ______________________________________

    The Miller Act requires a general contractor

    performing a contract valued at over $25,000 on any public

    construction project to obtain a performance bond for the

    protection of persons supplying labor and material in the

    prosecution of the work on the project. See 40 U.S.C. ___

    270a(a)(2). The Act provides that persons who have

    "furnished labor or material" to a public project may sue to

    recover from the payment bond any amount owed to them. Id. ___

    270b(a).

    The purpose of the Miller Act is "to protect

    persons supplying labor and material for the construction of

    federal public buildings in lieu of the protection they might

    receive under state statutes with respect to the construction

    of nonfederal buildings." United States ex rel. Sherman v. ______________________________

    Carter, 353 U.S. 210, 216 (1957); see also United States ex ______ ___ ____ ________________



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    rel. Pittsburgh Tank & Tower, Inc. v. G&C Enters., Inc., 62 ___________________________________ __________________

    F.3d 35, 35 (1st Cir. 1995) (same). Courts give the Act a

    liberal interpretation to achieve that purpose. See, e.g., _________

    Carter, 353 U.S. at 216; Clifford F. MacEvoy Co. v. United ______ _______________________ ______

    States ex rel. Calvin Tomkins Co., 322 U.S. 102, 107 (1944). _________________________________

    Despite the "highly remedial" nature of the Act,

    MacEvoy, 322 U.S. at 107, there are two important limitations _______

    on who can recover from the payment bond. First, the Miller

    Act allows recovery from the bond by persons who have a

    "direct contractual relationship" with either the general

    contractor or a first-tier subcontractor of the general

    contractor. 40 U.S.C. 270b(a). The Supreme Court has

    interpreted this provision to preclude recovery on the

    payment bond by anyone whose relationship to the general

    contractor is more remote than a second-tier subcontractor.

    See J.W. Bateson Co. v. United States ex rel. Bd. of Trustees ___ ________________ _____________________________________

    of the Nat'l Automatic Sprinkler Indus. Pension Fund, 434 _______________________________________________________

    U.S. 586, 590-91 (1977); MacEvoy, 322 U.S. at 107. _______

    Second, the Act imposes a strict notice requirement

    upon suppliers who have a direct contractual relationship

    with a first-tier subcontractor, but no relationship with the

    general contractor. In order to recover from the payment

    bond, such suppliers must send written notice of their claim

    on the payment bond to the general contractor within ninety

    days from the date that they supply the last of the materials



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    for which they make a claim. 40 U.S.C. 270b(a); see also ___ ____

    United States ex rel. John D. Ahern Co. v. J.F. White _____________________________________________ ___________

    Contracting Co., 649 F.2d 29, 31 (1st Cir. 1981).1 _______________

    B. Notice under the Miller Act. ___________________________

    Fulfilling the Act's notice provision is a strict

    condition precedent to recovery by suppliers of first-tier

    subcontractors. See Ahern, 649 F.2d at 31. The notice ___ _____

    provision serves an important purpose: it establishes a firm

    date after which the general contractor may pay its

    subcontractors without fear of further liability to the

    materialmen or suppliers of those subcontractors. See id.; ___ ___

    Noland Co. v. Allied Contractors, Inc., 273 F.2d 917, 920-21 __________ ________________________

    (4th Cir. 1959).

    ____________________

    1. The relevant statutory language concerning notice reads
    as follows:

    Every person who has furnished labor or material in
    the prosecution of the work provided for [a federal
    project] . . . and who has not been paid in full
    therefor . . . shall have the right to sue on such
    payment bond . . . Provided, however, That any person ________ _______
    having direct contractual relationship with a
    subcontractor but no contractual relationship express or
    implied with the contractor furnishing said payment bond
    shall have a right of action upon the said payment bond
    upon giving written notice to said contractor within
    ninety days from the date on which such person . . .
    furnished or supplied the last of the material for which
    such claim is made, stating with substantial accuracy
    the amount claimed and the name of the party to whom the
    material was furnished or supplied. . . . Such notice
    shall be served by mailing the same by registered mail,
    postage prepaid, in an envelop addressed to the
    contractor . . . .

    40 U.S.C. 270b(a).

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    1. Substance of Water Work's Notice. ________________________________

    While adherence to the notice requirement is

    mandatory, courts have allowed some informality in complying

    with the terms of the Miller Act regarding the method by

    which notice must be served. See, e.g., Fleisher Eng'g & __________ _________________

    Constr. Co. v. United States ex rel. Hallenbeck, 311 U.S. 15, ___________ ________________________________

    18 (1940) (holding written notice sufficient although it was

    not sent via registered mail as statute provides); Coffee v. ______

    United States ex rel. Gordon, 157 F.2d 968, 969 (5th Cir. ______________________________

    1946) (holding that a writing exhibited to the general

    contractor in the course of a discussion served as adequate

    notice under the Act). Courts have also been somewhat

    forgiving of deviations from the statutory requirement that

    the notice be in writing. See, e.g., Altech, 929 F.2d at __________ ______

    1092 (holding that the "only reasonable inference" from a

    meeting was that the subcontractor sought payment from the

    general contractor).

    The language of the Miller Act requires notice to

    the general contractor of the amount of the claim and name of

    the party to whom the material was furnished; it does not

    expressly require a demand that the general contractor pay.

    40 U.S.C. 270b(a); see also McWaters & Bartlett v. United ___ ____ ____________________ ______

    States ex rel. Wilson, 272 F.2d 291, 295 (10th Cir. 1959). ______________________

    Nevertheless, courts have consistently, and we think

    correctly, held that "the written notice and accompanying



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    oral statements must inform the general contractor, expressly

    or impliedly, that the supplier is looking to the general

    contractor for payment so that it plainly appears that the

    nature and state of the indebtedness was brought home to the

    general contractor." United States ex rel. Kinlau Sheet _____________________________________

    Metal Works, Inc. v. Great Am. Ins. Co., 537 F.2d 222, 223 __________________ ___________________

    (5th Cir. 1976) (internal quotation marks omitted); see ___

    also United States ex rel. Bailey v Freethy, 469 F.2d 1348, ____ _____________________________ _______

    1350-51 (9th Cir. 1972).

    Hyman argues that such notice as Water Works was

    shown to have provided to Hyman did not indicate that Water

    Works was looking to it for payment because the only "formal

    notice" that it received was a copy of Water Works's demand ____

    letter to Calvesco. Hyman points to court decisions holding

    that the mere forwarding to the general contractor of a copy

    of a demand sent to a subcontractor does not satisfy the

    Miller Act's notice requirement. See Maccaferri Gabions, ___ ____________________

    Inc. v. Dynateria, Inc., 91 F.3d 1431, 1437 (11th Cir. 1996) ____ _______________

    (denying recovery under the Miller Act because sending to the

    general contractor a copy of a collection letter that was

    sent to the subcontractor, even when combined with a joint

    payment plan and invoices, was insufficient notice); United ______

    States ex rel. Jinks Lumber Co. v. Federal Ins. Co., 452 F.2d _______________________________ ________________

    485, 488 (5th Cir. 1971).





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    But while adequate notice requires bringing home to

    the general contractor that the supplier is looking to it for

    payment, courts have not required formalistic proof of this.

    Communications sent to the general contractor detailing the

    supplier's claim against the subcontractor may, for example,

    be supplemented by oral and other written exchanges if these

    make it unambiguously clear that the supplier is seeking

    payment from the general contractor. See Altech, 929 F.2d at ___ ______

    1093; Coffee, 157 F.2d at 970; Kinlau, 537 F.2d at 223. ______ ______

    The record here shows not only that Water Works

    sent Hyman the amount and details of Water Works's claims

    against the subcontractor, but that these were accompanied by

    further oral and written communications that could only be

    perceived, and were in fact perceived, as looking to Hyman

    itself for payment. Water Works's credit manager, Wernick,

    initiated matters on February 3, 1995, by speaking on the

    telephone with two Hyman employees who were handling the Post

    Office Project account. During the course of several calls

    on that day, Wernick informed them that Water Works had not

    been paid by the subcontractor for its materials. Wernick

    thereupon faxed copies of Water Works's unpaid invoices and

    proofs of delivery to Hyman, thus informing Hyman of the

    amount Water Works claimed from the subcontractor. The

    district court found that, in these calls, Wernick also asked

    to obtain a copy of Hyman's payment bond for "the express



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    purpose of filing a bond claim." Hyman's personnel refused

    to release the requested bonding information, but, as the

    district court found, they countered with a promise that

    Hyman would issue joint checks payable to Jackson and Water

    Works, a device to ensure payment for Water Works's

    materials. Wernick continued to communicate about the unpaid

    claims with Hyman throughout the month of February. On

    February 9, Wernick spoke again with the same Hyman

    employees, who informed him that they were attempting to meet

    with the subcontractor to discuss the issue of the unpaid

    invoices. Finally on March 7, after more phone calls, Water

    Works sent to Hyman a copy of a demand letter it had written

    to Calvesco.2 The copy reflected at the bottom not only that

    a copy had gone to Hyman but that copies had been sent to

    Hyman's three Miller Act Sureties. Finally, on March 22,

    1995, Hyman wrote Water Works thanking it for its patience,

    indicating that it had already paid Jackson, expressing its

    ____________________

    2. Hyman argues that "the facts of the present case are even
    more persuasive than Maccaferri or Kinlau since Water Works __________ ______
    purported demand letter . . . was not made to Hyman's ___
    subcontractor Jackson, but rather to Calvesco." However, the
    names "Calvesco" and "Jackson" seem to have been used
    interchangeably on various occasions, and there is absolutely
    no evidence that Hyman was confused over the identity of the
    subcontractor identified by Water Works. Calvesco and
    Jackson were owned in common and Hyman had been a party to
    the agreement that substituted Jackson for Calvesco as
    subcontractor for the Project. While Hyman personnel, like
    Water Works, sometimes referred to "Calvesco," the name
    "Jackson" was correctly used by Hyman in its March 22 letter
    to Water Works declining to pay its claim, showing that Hyman
    was fully aware of thecorrect identity of the subcontractor.

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    reluctance to pay the same bill twice, and informing Water

    Works that it had "turned the entire matter over to our

    attorneys and, on their advi[c]e, we are not paying anyone

    until we have a clear picture of our options."

    The above evidence provides clear indication that

    Hyman understood that Water Works was looking to it for

    payment, having received, as the district court found "actual

    notice." Wernick's initial request for a copy of the bond,

    following his faxing of the unpaid invoices and his telephone

    calls to Hyman about the debt, suggested that Water Works was

    looking to it for payment. Hyman's comprehension of this can

    be inferred from Hyman's promise to issue joint checks in

    substitute for information about the bond. But we need not

    decide whether these actions by themselves sufficed to

    constitute notice. Following these and other exchanges,

    Water Works sent Hyman on March 7 a copy of Water Works's

    demand upon the subcontractor. Unlike the copy in

    Maccaferri, this indicated at the bottom that copies were __________

    also being sent to Hyman's three Sureties on the Miller Act

    bond, each of which was designated by name. It is not easy

    to think of a reason to notify the Sureties unless Water

    Works was looking to the bond for payment.

    In Maccaferri, the Eleventh Circuit held that __________

    merely sending the general contractor a copy of the demand to

    the subcontractor did not suffice to show that the supplier



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    was looking for payment to the general, but the surrounding

    circumstances were far less indicative that payment was

    sought, and there was no indication that the Sureties were

    being sent copies. Here, upon receipt of a copy of Water

    Works's demand upon the subcontractor showing plainly that

    other copies had been sent to Hyman's Sureties, Hyman could

    have had no illusion that it was not being asked to pay.

    Hyman's letter of March 22, 1995 fully confirms our

    interpretation. In the letter, Hyman thanked Water Works

    "for being so patient with us while we are trying to sort out

    the problems" relative to the Jackson claims. The letter

    went on to speak of Hyman's difficulties with Jackson,

    Hyman's strong reluctance to pay the same bill twice, and

    that it had "turned the entire matter over to our attorneys

    and, on their advice, we are not paying anyone until we have _________________

    a clear picture of our options" (emphasis added). "In the

    end," the letter went on, "we may, in fact, be held

    responsible for paying these invoices. But we will exhaust

    every legal remedy before we do." The district court

    inferred, and we entirely agree, that this letter must have

    been in response to what Hyman believed was a request for

    payment by Water Works. See Altech, 929 F.2d at 1093 ___ ______

    (general contractor's letter held to provide evidence of

    notice).





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    We, therefore, agree with the district court that

    in this period Hyman received notice sufficient to meet the

    requirements of the Miller Act.

    2. Timing of Water Works's Notice. ______________________________

    The district court found that the ninety-day period

    began to run on December 29, 1994, the day that Water Works

    made its final delivery of materials to the Post Office

    Project. Thus, by the court's calculations, Water Works's

    letter of March 7, 1995, a copy of which was sent to Hyman

    and the Sureties, and which in combination with the earlier

    invoices constituted the written portion of the notice, fit

    within the ninety-day limit.

    In support of its assertion that the court should

    have used the date of the November order, November 1, 1994,

    rather than the date of the December order when calculating

    the ninety-day time limit, Hyman suggests that each order

    under an open account represents a separate contract with an

    individual ninety-day limit. See United States ex rel. ___ _______________________

    Robert DeFilippis Crane Serv., Inc. v. William L. Crow _______________________________________ _________________

    Constr. Co., 826 F. Supp. 647, 655 (E.D.N.Y. 1993) _____________

    (concluding that "[w]here claims are based on a series of

    contracts, a claim must be made within 90 days from the date

    on which the supplier 'furnished or supplied the last of the

    material' for each underlying contract"); United States ex _________________

    rel. I. Burack, Inc. v. Sovereign Constr. Co., 338 F. Supp. ____________________ ______________________



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    657, 661 (S.D.N.Y. 1972). Under this reasoning, Hyman

    argues, the limit on the November order had run by the time

    that Water Works sent notice to Hyman.

    While several district courts have held that Miller

    Act notice runs from each order on an open contract, the

    weight of authority contradicts that position. See United ___ ______

    States ex rel. A&M Petroleum, Inc. v. Santa Fe Eng'rs, Inc., __________________________________ ______________________

    822 F.2d 547 (5th Cir. 1987) (collecting cases from the

    Second, Fourth, and Tenth Circuits that have held, either

    implicitly or explicitly, that notice on an open account runs

    from the last delivery of materials); Noland, 273 F.2d at ______

    920-21. In Noland, the Fourth Circuit reasoned that, ______

    although a strict reading might fulfill the purpose of the

    notice provision by offering more protection to the general

    contractor, the goal of a specific statutory provision must

    take a back seat to the purpose of the overall statute, which

    is to provide recovery for suppliers who have provided

    materials but not received compensation. See Noland, 273 ___ ______

    F.2d at 920-21.

    We agree with the reasoning in Noland. Where ______

    claims are based on an open account theory, the ninety-day

    notice period for all of the deliveries begins on the date of

    the last delivery to the project. The parties to this action

    agree that Water Works delivered the last of its materials to

    the Post Office Project on December 29, 1994. We therefore



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    conclude that the district court correctly refused to deny

    recovery on the November order merely because it was part of

    an open account.

    Hyman also argues that, since the district court

    denied recovery to Water Works for the December order of

    $157.76, it should not have used the date of that order for

    purposes of calculating the timeliness of notice. We are not

    persuaded.

    As an initial matter, we note that the statute

    states that the time limit runs from the date of the last

    delivery of material "for which a claim is made." 40 U.S.C.

    270b(a). The statute does not start the time limit on the

    last claim for which the plaintiff eventually recovers; such

    a provision might prove unworkable.

    But even if the statute runs from the last

    recoverable claim, we see little problem. In denying Water

    Works recovery on the December order, the district court

    wrote a footnote explaining its reasoning for distinguishing

    between the November and December orders: the November order

    form contained the name of a Jackson employee while there was

    no name on the December order. The district court concluded

    that there was "no evidence as to whether Calvesco or Jackson

    placed the [December] order." Accordingly, the court limited

    Water Works's recovery to the amount of the November order

    ($53,493.83) plus costs and interest.



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    The undisputed facts are as follows. First, Water

    Works provided materials that were incorporated into the Post

    Office Project. Second, Water Works did not begin shipping

    these materials until after Jackson became the subcontractor

    on the Project. Third, although Water Works insisted upon

    sending its invoices to Calvesco, Jackson paid for the first

    five shipments by Water Works. Fourth, Calvesco was not a

    subcontractor on the Project during the time that Water Works

    shipped materials to the Project. Fifth, the last date that

    Water Works delivered materials to the Project was December

    29, 1994.

    On these facts, we see no reason for the court to

    have questioned if Calvesco rather than Jackson placed the

    December order. Calvesco, having been replaced by Jackson as

    the subcontractor on the Post Office Project, had no reason

    to order materials for this job. The only reasonable

    inference is that Jackson placed this order, as it did

    earlier ones. While in the absence of a cross appeal, the

    court's denial of the $157.76 stands, we see no reason to

    reject the court's determination that the December 29, 1994

    date triggered the notice period.

    As the notice was adequate and as the district

    court did not err in beginning the notice period from

    December 29, 1994, Water Works satisfied the notice

    requirements of the Miller Act.



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    C. Water Works's Relationship to Hyman. ___________________________________

    In order to recover from the payment bond, a person

    must have a "direct contractual relationship" either with the

    general contractor or with a direct subcontractor. 40 U.S.C.

    270b(a); see also Bateson, 434 U.S. at 590-91. Hyman and ___ ____ _______

    Water Works agree that they had no direct relationship.

    Hyman argues further that Water Works did not have a direct

    contractual relationship with any of Hyman's subcontractors.

    Hyman relies upon the undisputed fact that Water Works

    consistently refused to extend credit to Jackson and regarded

    Calvesco as its customer.

    As the district court correctly noted, courts have

    allowed recovery under the Miller Act by suppliers who

    furnish materials to a subcontractor "from time to time on

    open account . . . without formal contract." Noland, 273 ______

    F.2d at 919; see also Apache Powder Co. v. Ashton Co., 264 ___ ____ _________________ ___________

    F.2d 417, 422-23 (9th Cir. 1959). It is undisputed that

    Water Works supplied materials to the Project and that

    Jackson was the demolition, excavation and site work

    subcontractor on the Post Office Project after September 27,

    1994. In addition, Jackson, rather than Calvesco, paid Water

    Works's first five invoices. This evidence clearly supports

    the district court's finding of the existence of an open

    account between Jackson and Water Works. Since Jackson was





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    Hyman's direct subcontractor, the Act's tiering requirements

    are satisfied.

    Since we find that the district court correctly

    allowed Water Works to recover under an open account theory,

    we need not address the propriety of its alternative holding,

    which allowed recovery on the basis of quantum meruit.

    We have carefully considered Hyman's other

    arguments; none of them persuade us that the district court

    erred in its determination.

    Affirmed. ________

































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