Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/142598
InCourt Court by Brian Morrow Attorney Brian Morrow is a partner in Newmeyer & Dillion LLP and a licensed civil engineer specializing in construction law, incl. road and heavy construction. brian.morrow@ndlf.com Generating Claims Subcontractor recovers profits and shared savings under Miller Act T he Miller Act requires general contractors on federal construction projects to furnish performance and payment bonds to secure performance and payment to all suppliers of labor and material. The Miller Act is subject to liberal construction to effect its intent of protecting those who furnish labor or materials for public works. Some cases have upheld the right of first-tier subcontractors to recover lost profits and other foreseeable damages resulting from the prime contractor's breach of subcontracts, including shared savings from value engineering. In Fisk Electric Co. v. Fidelity and Deposit Company of Maryland (Feb. 14, 2013), the U.S. District Court for the Eastern District of Louisiana upheld a judgment on a Miller Act claim in favor of a first-tier subcontractor, Fisk Electric, regarding payment for a diesel generator for a pumping station. The amount awarded included lost profits and shared savings. The U.S. Army Corps of Engineers commissioned a project for a pump station in Jefferson Parish, La. The Corps hired prime contractor, Benetech LLC, to perform the work. Benetech hired subcontractor, CDM Constructors, Inc., under a lump-sum subcontract, including to procure and install a 2,865-KV diesel generator and related equipment for the pump station. In late summer 2010, CDM obtained a quote of $2,352,317 (not including tax) from Stewart and Stevenson Power Products LLC for the generator. Because CDM had a lump-sum subcontract, it did not add, and would not have been able to add, a profit margin to the approximate $2.3 million cost of the generator. Shortly after obtaining this quote, CDM was "abruptly" terminated and Benetech contacted Fisk to supply the generator. Benetech and Fisk 22 July 2013 Better Roads InCourt_BR0713.indd 22 6/28/13 10:23 AM