United States ex rel. Benefit of Walton Technology, Inc. v. Weststar Engineering, Inc.
290 F.3d 1199 | Court of Appeals for the Ninth Circuit | 2002
What This Case Means for Subcontractors
Walton Technology, a subcontractor on a federal project, sued for unpaid equipment rental fees. The subcontract contained a 'pay when and if paid' clause stating Walton would only get paid after the prime contractor received payment from the government. The Ninth Circuit ruled that such clauses do not automatically waive a subcontractor's rights under the Miller Act, which guarantees payment for work on federal projects. The court sent the case back for trial, rejecting the surety's argument that the unpaid clause excused them from liability.
Key Takeaways
- •A 'pay when and if paid' clause in your subcontract does not eliminate your Miller Act payment bond rights—courts require a clear, explicit waiver to remove those protections
- •If the prime contractor hasn't been paid by the government, you may still have a valid claim against the Miller Act surety bond; don't assume you're out of luck
- •Document everything about payment terms in writing and push back on vague 'pay when paid' language—courts scrutinize these clauses closely and interpret them against the drafter
Pay when and if paid clause does not constitute clear and explicit waiver of Miller Act rights.
Frequently Asked Question
If my subcontract says I only get paid 'when and if' the prime contractor gets paid, can I still claim against the Miller Act bond?
Yes. Courts have ruled that 'pay when and if paid' clauses do not automatically waive your Miller Act rights unless the waiver is clear and explicit. You can still pursue a claim against the surety bond even if the prime contractor hasn't received payment from the government. Always consult an attorney about your specific contract language.
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