The Deadline to Sue on a Payment Bond

A payment bond claim has two clocks. The first is the notice period that applies to remote claimants. The second is the period within which the action itself must be commenced, and it applies to every claimant regardless of tier. Under the federal statute an action must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.

The trigger is the claimant's own work

The period runs from the claimant's own last performance. It does not run from substantial completion of the project, from final acceptance by the agency, from the date the invoice went unpaid, or from the point at which negotiations broke down. A supplier that finished delivering in the early months of a two-year project may find its period expiring while the project is still under construction and while everyone involved still expects to be paid.

This produces the characteristic pattern of lost bond claims. Work ends. Invoices go unpaid. Discussions continue with the subcontractor, then with the prime contractor, then with the surety after a claim is submitted. Documents are exchanged. A partial payment arrives and is applied to the oldest invoices. Twelve months pass without a filing, and a claim that no one disputed on the merits becomes unenforceable.

Identifying the last day is therefore the first task in evaluating a claim, and it is done from the claimant's own records rather than from the project schedule. Delivery tickets signed on site, daily reports, payroll records and dated photographs all serve. Where a claimant supplied under several purchase orders covering distinct scopes, each may carry its own period, and treating the latest of them as governing the whole account is a mistake that surrenders the earlier claims.

What does not extend the period

The events that reassure claimants have no effect. Submission of a claim to the surety does not extend the period. The surety's acknowledgment does not. A request for supporting documents does not, nor does the surety's own delay in evaluating them. Partial payment does not, since the statutory trigger is furnishing rather than the state of the account. Continuing to perform unrelated work for the same prime contractor on the same site does not, because the period attaches to the specific claim.

What does work is a written agreement with the surety to extend or toll the period, made before it expires and signed by a person with authority to bind the surety. Sureties do give these, particularly where a project is close to resolution and litigation would benefit no one. They should be obtained in writing, should identify the claim and the extended date precisely, and should not be inferred from correspondence expressing willingness to keep talking.

Whether the federal period is a true statute of limitations subject to equitable tolling, or a condition attached to the right itself that no doctrine can extend, has been treated differently by different courts. The distinction rarely helps a claimant in practice. Arguments for tolling depend on conduct amounting to concealment or affirmative misdirection, they are expensive to run, and they are unnecessary in every case where the claim was simply filed on time.

A separate one-year period appears elsewhere in the federal scheme and is sometimes confused with this one. Where the government sues the surety on a performance bond for taxes withheld from wages, it must first give the surety written notice within the periods the statute prescribes, and may not bring the action more than one year after that notice. That period belongs to the government and has no bearing on a supplier's claim.

Where and how the action is brought

The federal action is brought in the name of the United States for the use of the person bringing it, in the United States district court for any district in which the contract was to be performed and executed, regardless of the amount in controversy. The government is not liable for the costs or expenses of the action. The venue provision is specific to the statute and is not satisfied by a district that would otherwise be proper on general venue principles, so the place of performance must be identified from the contract documents.

Forum selection clauses in subcontracts requiring litigation elsewhere have generated substantial dispute. So has the interaction between the statutory action and arbitration clauses binding the claimant and its own customer. Neither question has a single national answer, and a claimant facing either should assume the statutory period continues to run while the question is argued. Filing within the period and then addressing forum is safer than deferring the filing.

State deadlines use other triggers

State periods differ in both length and starting event. California permits an action any time after the claimant ceases to provide work but not later than six months after the period in which a stop payment notice may be given expires, tying the deadline to project events rather than to the claimant's own last day. Michigan bars any action commenced more than one year after final payment was made to the principal contractor, a date the claimant cannot observe directly and must inquire about. Washington conditions the right of action on filing a notice of claim within thirty days after completion and acceptance.

The working discipline is the same everywhere. Identify the governing statute using the analysis in little Miller Acts and where they diverge from the federal rule, calendar the deadline from the earliest defensible trigger, and complete the proof described in proving the claim and the records that support it before the period rather than after. A claim filed on time but poorly supported can be repaired; a claim filed late meets the first and strongest of the answers described in defenses the surety will raise.