United States Ex Rel. Accoustical Concepts, Inc. v. Travelers Casualty & Surety Co. of America
635 F. Supp. 2d 434 | District Court, E.D. Virginia | 2009
What This Case Means for Subcontractors
A subcontractor sued a surety company on a Miller Act payment bond for work on federal projects. The surety tried to offset what it owed by using debts the subcontractor owed on unrelated non-federal projects. The court ruled that sureties cannot use setoff clauses to delay payment on federal work, because the Miller Act requires prompt payment to subcontractors regardless of disputes on other jobs.
Key Takeaways
- •Setoff clauses in your subcontract cannot be used to withhold payment for federal project work, even if you owe money on other projects
- •The Miller Act protects your right to prompt payment on federal jobs—sureties must pay you for completed federal work without delay
- •If a general contractor tries to offset federal project payments with claims from non-federal projects, you have grounds to sue the surety directly
Setoff provisions contravene the Miller Act's purpose of providing prompt payment to subcontractors.
Frequently Asked Question
Can a general contractor withhold my payment on a federal project because I owe them money on a different job?
No. Under the Miller Act, sureties cannot use setoff clauses to delay payment for federal construction work, even if you have debts on unrelated projects. The law requires prompt payment for federal work regardless of disputes elsewhere. You can sue the surety directly if payment is wrongfully withheld.
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