Better Roads

June 2014

Better Roads Digital Magazine

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Better Roads June 2014 23 contractor, it could not maintain its Miller Act claim. The district court found that Technica lacked a contractor's li- cense, concluded that California's contractor license law applied and ruled Technica could not pursue its Miller Act claim for payment. Technica appealed. The court of appeal reviewed the history and back- ground of the Miller Act. The Miller Act requires general contractors on federal construction projects to furnish a payment bond for the protection of all persons supplying labor and materials in performing the work. The court stat- ed the Miller Act "represents a congressional effort to pro- tect persons supplying labor and ma- terial for the construction of federal pub- lic buildings in lieu of the protections they might receive under state stat- utes with respect to the construc- tion of nonfederal buildings." The court noted the Miller Act is entitled to a liberal construction and ap- plication to affect the Congressional intent of protecting those who provide labor and materials for federal projects. Candelaria and CCIC argued state law, such as Section 7031(a), could be applied along with the Miller Act. However, the court found enforcement of state licensing requirements against Miller Act claims would wreak havoc on application of the Miller Act. The court examined prior cases by the U.S. Supreme Court and other courts of ap- peal. These prior cases held that rights and remedies under the Miller Act may not be conditioned by state law. The court noted federal subcontractors routinely bid on projects throughout the nation and often perform contracts that span multiple states. The court found requir- ing federal contractors to comply with contractor licens- ing requirements in any given state would be contrary to Congress's intent in enacting the Miller Act, which was meant to reduce the hurdles placed on federal subcontrac- tors, labor providers and materialmen in seeking payment. As a result, the court of appeal held that California's licens- ing requirement is not a defense to a Miller Act claim, and reversed the judgment of the district court. The Technica matter highlights an important distinction between state and federal construction projects re- garding contractor li- censing laws and the right to seek pay- ment under the Miller Act. In non-federal construc- tion projects in California, contractors are barred from seeking payment if they are unlicensed at any time while performing the work. In contrast, in federal construction projects in California, unlicensed contractors are allowed to seek payment pursu- ant to the Miller Act. Contractors should be sure to understand their contract terms, conditions and applicable laws, including allowable remedies and defenses to payment in the venue where they are working. Without such an understanding, they might find them- selves in the unenviable position of having a claim or de- fense to payment barred by a legal issue, as set forth in the Technica decision. v InCourt_BR0614.indd 23 6/2/14 1:12 PM

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