A&C Construction & Installatio v. Zurich American Insurance Com ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-3325
A&C CONSTRUCTION & INSTALLATION, CO. WLL,
Plaintiff-Appellant,
v.
ZURICH AMERICAN INSURANCE COMPANY and THE INSURANCE
COMPANY OF THE STATE OF PENNSYLVANIA,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 17-cv-04307 — Harry D. Leinenweber, Judge.
____________________
ARGUED MAY 26, 2020 — DECIDED JUNE 30, 2020
____________________
Before FLAUM, SCUDDER, and ST. EVE, Circuit Judges.
ST. EVE, Circuit Judge. The Miller Act, 40 U.S.C. § 3131 et
seq., seeks to protect subcontractors against nonpayment for
work performed on federal government construction projects
by requiring the prime contractor to provide a payment bond
on which the subcontractor can then make a claim for pay-
ment. A&C Construction & Installation, Co. WLL was a sub-
contractor on an air base project in Qatar and claims that it
2 No. 19-3325
was not paid approximately $8.5 million for work it per-
formed on the project, so it filed this action against the prime
contractor’s two sureties, Zurich American Insurance Com-
pany and The Insurance Company of the State of Pennsylva-
nia. As strict preconditions to payment, however, the Miller
Act requires that subcontractors provide a notice of nonpay-
ment within ninety days after the last day of work performed
and then file suit within one year of the last date of work. The
district court found that A&C missed both deadlines and
granted summary judgment in favor of the sureties. Because
A&C did not meet the Miller Act’s notice requirement, we af-
firm the judgment.
I. Background
This dispute arises from a federal construction project
with the United States Army Corps of Engineers for the con-
struction of two billets on the Al Udeid Air Base in Qatar. The
Miller Act provides that on any contract of more than
$100,000 for “the construction, alteration, or repair of any
public building or public work of the Federal Government”
the contractor must supply “[a] payment bond with a surety
satisfactory to the officer for the protection of all persons sup-
plying labor and material in carrying out the work provided
for in the contract for the use of each person.” 40 U.S.C.
§ 3131(b)(2). Amec Foster Wheeler Environment & Infrastruc-
ture, Inc., was the prime contractor on the Qatar air base pro-
ject. As such, Amec Foster Wheeler, as principal, and defend-
ants Zurich American Insurance Company and The Insurance
Company of the State of Pennsylvania, as sureties, executed
and delivered to the Army Corps the required payment bond.
Amec Foster Wheeler awarded certain work on the project
to a subcontractor, Black Cat Engineering & Construction
No. 19-3325 3
WLL—first mechanical work and later additional fire sup-
pression work. Black Cat, in turn, subcontracted with A&C
for some of that work. A&C, therefore, was the sub-subcon-
tractor or second-tier subcontractor on the project. On January
31, 2013, Black Cat and A&C entered into a contract for A&C
to perform portions of the mechanical, electrical, and plumb-
ing services that Amec Foster Wheeler awarded to Black Cat
(the “MEP Agreement”). On July 1, 2013, Black Cat and A&C
entered into a second contract for A&C to perform portions of
the fire suppression work awarded to Black Cat (the “Fire
Suppression Agreement”). Together, the work for these two
contracts forms the basis of this lawsuit.
A&C later subcontracted some of the ductwork under the
MEP Agreement to Raymond Nahra for Electrical & Mechan-
ical Works Co., W.L.L. (“RNC”). Thus, on the project, RNC
was a third-tier subcontractor. From all accounts, RNC per-
formed work on the project through the project’s completion
date in February 2017.
The relationship between Black Cat and A&C eventually
deteriorated. On December 16, 2015, Black Cat terminated
A&C from the Fire Suppression Agreement. The sureties con-
tend that A&C had already stopped most of its work related
to the MEP Agreement in November 2015 and that A&C last
performed any work on the project on May 16, 2016. A&C dis-
putes this characterization, primarily as it relates to the date
it last performed any work on the project. Specifically, A&C
insists that, despite the termination, it continued to provide
labor and equipment after that date because its equipment re-
mained on the site for Black Cat’s use, and it continued to pro-
vide supervision of one of its subcontractors (RNC) through
the project’s completion on February 28, 2017. Accordingly,
4 No. 19-3325
A&C asserts that the date it last performed labor or supplied
material for the project was February 28, 2017.
It is undisputed, however, that A&C provided its notice
under the Miller Act on August 16, 2016. That notice claimed
that Black Cat owed A&C $8,449,710 for “Mechanical, Electri-
cal and Plumbing and Fire Suppression works.” As to the
“[d]ate on which the last of the labor, services, equipment or
materials were furnished,” A&C stated that “[c]ertain A&C
equipment remains onsite.”
A&C filed its complaint on June 7, 2017, alleging a single
Miller Act claim against the sureties for payment on the bond
in the amount of $8,637,423. After discovery, the sureties
moved for summary judgment, arguing that A&C’s last day
of work was—at the latest—May 16, 2016. The notice date,
August 16, 2016, is ninety-one days after May 16, 2016, and
outside of the mandatory ninety-day notice period. A&C also
did not file suit until June 7, 2017, more than one year after
the sureties allege A&C last provided labor or material on the
project. A&C disputed the May 16, 2016, date and instead ar-
gued that it leased equipment to Black Cat that was utilized
on the project up until its conclusion on February 28, 2017,
and its subcontractor RNC also continued to provide labor
until the completion date. Thus, A&C countered, it filed the
lawsuit within one year of that date. Further, as to the fact that
its Miller Act notice was served far more than ninety days be-
fore its alleged last day of work, A&C simply argued that it
“provided too much notice” and there was nothing that barred
it from providing the notice earlier than required.
The district court granted the sureties’ motion for sum-
mary judgment. The court found that even if A&C was able
to use leased equipment to Black Cat as its claimed last day of
No. 19-3325 5
work performed as a legal matter, the argument still failed be-
cause A&C did not provide notice “within 90 days” of that
date (February 28, 2017). As to the “too much notice” argu-
ment, the district court similarly rejected it because it did “not
meet with the requirement that the limitations periods consti-
tute conditions precedent and are to be strictly construed.”
Based on some admitted misstatements in the district
court’s opinion, A&C filed a post-judgment motion pursuant
to Federal Rule of Civil Procedure 59(e) to alter or amend the
judgment, alleging that the decision rested on “a manifest er-
ror of fact.” In three places, the opinion erroneously stated
that A&C did not file its complaint within one year of its Mil-
ler Act notice. (E.g., “If Plaintiff is to rely upon its 90-day no-
tice, then it needed to bring suit with one year or by August
19, 2017 [sic] …. It did not do so. In fact, its Complaint, which
was filed on June 7, 2017, ….”). But A&C in fact had—the no-
tice date was August 16, 2016, and the lawsuit was filed ten
months later on June 7, 2017. The problem for A&C, though,
is that the one-year limitation does not run from the notice
date. Both the notice period and lawsuit period run from the
last day of claimed work. So the district court’s miscalculated
time period was irrelevant.
Nevertheless, A&C seized on these mistakes and argued
for the first time that, according to the district court’s own rea-
soning, “if A&C is not entitled to recover for work performed
after the date of its notice (as the Court has held), then the last
date of recoverable work was on August 16, 2016, the date of
the notice.” A&C now contended that it served its Miller Act
notice “contemporaneous[ly] with work performed by A&C
(in the form of, at the least, leasing equipment),” and, because
its complaint “was filed within one year of that date,” it was
6 No. 19-3325
“not barred from seeking payment for its pre-notice work.”
The district court denied A&C’s Rule 59(e) motion,
“apologi[zing] for the sloppy proof reading” but “not[ing]
that it cited and applied the correct standard” throughout the
opinion. Despite the few misstatements, the court found that
it committed no manifest error of fact or law.
A&C now appeals from the district court’s summary judg-
ment ruling.
II. Discussion
This appeal presents a seemingly straightforward ques-
tion—whether A&C’s notice and civil action were timely un-
der the Miller Act. The parties, however, dispute the correct
date of the last work performed, which is the relevant trigger-
ing event from which the time periods run. We review the
district court’s summary judgment ruling de novo and con-
sider facts and draw inferences in the light most favorable to
the nonmoving party. Hall v. City of Chicago, 953 F.3d 945, 950
(7th Cir. 2020). Summary judgment is appropriate when
“there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a).
Section 3133 of the Miller Act governs the right to bring a
civil action on a payment bond, and provides two express
timing requirements. First, a sub-subcontractor must give
“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.” 40 U.S.C. § 3133(b)(2). That is, the sub-sub-
contractor must first notify the general contractor of the situ-
ation before it can sue on the bond. Second, assuming the
No. 19-3325 7
general contractor does not pay the outstanding bill, any “ac-
tion brought under this subsection must be brought no later
than one year after the day on which the last of the labor was
performed or material was supplied by the person bringing
the action.” Id. § 3133(b)(4). Though the Miller Act is “reme-
dial and to be liberally construed,” giving written notice and
bringing suit within the prescribed time limits are strict con-
ditions precedent to the right to maintain the action. United
States ex rel. Material Serv. Div. of Gen. Dynamics Corp. v. Home
Indem. Co., 489 F.2d 1004, 1005 (7th Cir. 1973).
Before we can decide the timeliness of A&C’s notice and
lawsuit, we must confront a threshold question regarding
waiver. At summary judgment, A&C opposed the sureties’
motion on the basis that (1) its August 16, 2016 notice was
timely because it provided “too much notice,” being served
earlier than the claimed last date of work, February 28, 2017;
(2) its lawsuit was timely filed on June 7, 2017, because it was
filed within one year of the claimed last date of work, Febru-
ary 28, 2017; and, therefore, (3) it was entitled to recover for
all work performed through its claimed last day of work, Feb-
ruary 28, 2017. In its post-judgment motion, A&C’s position
shifted to argue that: (1) its August 16, 2016 notice was timely
for work performed on or before that date; (2) its lawsuit was
timely filed within one year of the notice; and, therefore, (3) it
was entitled to recover for its pre-notice work, or through Au-
gust 16, 2016. Now on appeal, A&C continues to press its the-
ory of partial recovery for pre-notice work only. That argu-
ment was not properly presented to the district court and, as
a consequence, A&C has waived it.
The purpose of Federal Rule of Civil Procedure 59(e) is to
allow a party to bring to the district court’s attention a
8 No. 19-3325
manifest error of fact or law so that it may correct, or at least
address, the error in the first instance. Moro v. Shell Oil Co.,
91 F.3d 872, 876 (7th Cir. 1996). A Rule 59(e) motion, however,
“does not allow a party to introduce new evidence or advance
arguments that could and should have been presented to the
district court prior to the judgment.” Bordelon v. Chicago Sch.
Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000) (quoting
Moro, 91 F.3d at 876); LB Credit Corp. v. Resolution Tr. Corp.,
49 F.3d 1263, 1267 (7th Cir. 1995) (“[A] motion to alter or
amend a judgment is not appropriately used to advance ar-
guments or theories that could and should have been made
before the district court rendered a judgment.”). The district
court’s “opinions are not intended as mere first drafts, subject
to revision and reconsideration at a litigant’s pleasure.”
Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282,
288 (N.D. Ill. 1988). A&C had the opportunity to make the ar-
gument that it now advances during the summary judgment
proceedings but failed to do so. A&C must live with that de-
cision.
A&C’s attempt to characterize this argument as merely
“narrow[ing] the issues on appeal” does not save the day.
Though A&C nominally maintains the same claimed last day
of work of February 28, 2017, A&C did not—before the dis-
trict court entered judgment—discuss the pre-notice period as
a separate recoverable period or its entitlement thereto. There
was no mention of this pre-notice, partial recovery theory in
A&C’s summary judgment briefing, and all of its allegations
both before and during summary judgment related to full re-
covery for work performed through the project’s completion
in February 2017. It was not until after the district court issued
its summary judgment opinion that A&C grabbed hold of cer-
tain (erroneous) language and unveiled its new partial
No. 19-3325 9
recovery theory, arguing that by the court’s own reasoning it
was now entitled to recover for its pre-notice work. Far from
simply narrowing issues to present for appellate review, this
represents a complete shift in A&C’s alleged right to recover
that materially alters the resulting legal analysis. The record
before the district court at summary judgment was silent as to
A&C’s claim for partial recovery and we will not take up the
merits of that argument for the first time.
With the scope of our review settled, we turn to the ques-
tion properly before us. Though a factual dispute still exists
regarding A&C’s last day of work—the sureties assert May
16, 2016, and A&C claims February 28, 2017—we need not re-
solve that issue to decide the appeal. As the district court did,
we will assume that the date A&C last performed work for
purposes of its Miller Act claim is February 28, 2017. There is
no dispute, however, that A&C served its Miller Act notice on
August 16, 2016. As one of the strict preconditions to the right
to bring a civil action on the payment bond, a sub-subcontrac-
tor must give “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.” 40 U.S.C. § 3133(b)(2). August
16, 2016, is not “within 90 days” of February 28, 2017. The stat-
ute is unambiguous on the timing of the notice requirement
and we must enforce it as written. See U.S. ex rel. S & G Exca-
vating, Inc. v. Seaboard Sur. Co., 236 F.3d 883, 885 (7th Cir.
2001). A&C failed to timely serve its Miller Act notice and
therefore cannot maintain an action against the sureties on the
payment bond.
10 No. 19-3325
III. Conclusion
The Miller Act aims to protect subcontractors on federal
construction projects against nonpayment, but nonetheless
demands strict compliance with certain conditions precedent
to the right to recover. Having waived its partial recovery ar-
gument for pre-notice work only, we are left with a straight-
forward question of whether A&C provided its required Mil-
ler Act notice within ninety days of the date it claimed for its
last day of recoverable work. A&C did not and therefore can-
not sue on the payment bond. The judgment of the district
court is
AFFIRMED.