United States of America for the Use and Benefit of T.M.S. Mechanical Contractors, Inc., Cross-Appellee v. Millers Mutual Fire Insurance Company of Texas, Third-Party Cross-Appellant v. The Craftsmen, Inc., Third-Party and Joseph Breedlove, J.D. Richmond, Jr. And Doris D. Richmond, Third-Party
942 F.2d 946 | Court of Appeals for the Third Circuit | 1991
What This Case Means for Subcontractors
T.M.S. Mechanical Contractors, a subcontractor on a VA hospital project, sued the Miller Act surety for Millers Mutual Fire Insurance after the general contractor delayed and then terminated the work. The court ruled that subcontractors can recover actual out-of-pocket costs for labor and materials caused by delay, but cannot recover termination costs or lost profits. This case clarifies what damages are recoverable under Miller Act bonds when projects are delayed or terminated.
Key Takeaways
- •You can recover extra costs for labor and materials directly caused by project delays under a Miller Act surety bond claim.
- •You cannot recover termination costs, demobilization fees, or lost profits on delayed work—only actual increased out-of-pocket expenses.
- •Document all delay-related costs carefully with dates and amounts to prove they were caused by the delay, not other factors.
Subcontractor can recover increased out-of-pocket costs for labor and materials caused by delay.
Frequently Asked Question
Can I recover termination costs and lost profits from a Miller Act surety bond when a project is delayed or terminated?
No. You can only recover actual out-of-pocket costs for labor and materials that were directly caused by the delay. Termination costs, demobilization expenses, and lost profits are not recoverable under Miller Act surety claims. Focus your claim on documented increases in labor and material costs that resulted from the delay itself.
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