United States Ex Rel. McKenney's, Inc. v. Government Technical Services, LLC
531 F. Supp. 2d 1375 | District Court, N.D. Georgia | 2008
What This Case Means for Subcontractors
McKenney's, a subcontractor, was not paid $66,950 by the general contractor GTS on a CDC project in Atlanta. McKenney's sued under the Miller Act federal payment bond. The court ruled that pay-when-paid clauses in subcontracts cannot prevent a subcontractor from collecting on the federal payment bond. This means federal law protects your right to payment regardless of what your subcontract says about waiting for the prime contractor to get paid first.
Key Takeaways
- •Pay-when-paid clauses in your subcontract cannot block your claim against the Miller Act payment bond—federal law overrides them
- •You can sue the payment bond surety directly if the general contractor doesn't pay you within 90 days of completing your work
- •Document your completion date and payment demand carefully, as the 90-day clock starts from when you finish, not when you invoice
A contract provision that would deny the subcontractor its federal remedy under the Act cannot be used as a defense by a surety.
Frequently Asked Question
Can my subcontract's pay-when-paid clause stop me from collecting on the payment bond?
No. Federal law (the Miller Act) protects your right to sue the payment bond surety directly, and contract clauses cannot override this federal remedy. Even if your subcontract says you must wait for the prime contractor to get paid first, you can still claim the bond after 90 days of non-payment.
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