The “Little” Miller Act

1. Application.

   The Little Miller Act is Alabama’s version of the Miller Act. Ala Code § 39-1-1 (1975); Headley v. Housing Auth., 347 So. 2d 532 (Ala. Civ. App. 1977). The Alabama Little Miller Act requires any person or entity entering into a contract with the state or any county or municipal corporation or subdivision thereof for the performance of any public work to provide, before commencing work, a performance bond with a penal amount equal to 100% of the contract price and a payment bond in an amount not less than 50% of the contract price.

   A Little Miller Act bond is not required to secure contracts of less than $5,000.00.

2. Who is Protected

   The Little Miller Act is to be liberally construed to effect the purpose of the statute. E.g., Headley, supra; Sparks Constr. Co. v. Newman Bros., 51 Ala. App. 690, 288 So. 2d 749 (1974). In Sumlin v. Hagan Storm Fence Co. of Mobile, 409 So. 2d 818 (Ala. 1982), the Alabama Supreme Court reiterated its liberal construction of the statute. The plaintiff, Hagan, was a supplier to a subcontractor on a public works project. Hagan had several dealings with the subcontractor on various jobs. The subcontractor made several payments to Hagan but did not specify the jobs to which the payments should be credited. Hagan applied the payments to the oldest outstanding jobs The general contractor fully paid the subcontractor on the job at issue but Hagans books reflected an additional $9,000.00 due on that particular job The court allowed recovery on the bond, noting that to do otherwise would “ignore the underlying purpose of… § 39-1-1(b): to insure that a materialman receives full payment for labor or materials which he supplies to a public; works project.” Id. at 820.

   From these cases, and the language of the Act, many Alabama practitioners believe that the Alabama act, unlike its federal counterpart, will be interpreted to afford protection to any tier supplier or subcontractor.

3. What is Covered?

   1. Labor and Materials.

      Labor and material incorporated into the work, or reasonably expected to be incorporated into work, are protected. See Riley-Stabler Const. Co. v. Westinghouse Elec. Corp., 396 F. 2d 274 (5th Cir. 1968).

   2. Equipment and Repairs.

      Items normally consumed in the project, such as small tools should be covered. Singer v. Anniston Hardware Co., 222 Ala. 620, 133 So. 910 (1931) Rental of necessary equipment is covered. John E. Ballenger Const. Co. v. Joe F. Walter Const. Co., 236 Ala. 548, 184 So. 275 (1938). Repairs incidental in nature and made necessary by the prosecution of the work, are protected by the statute. U.S.F. & G. v. Benson Hdwe. Co., 222 Ala. 429, 132 So. 622 (1931).

   3. Freight and Storage Costs.

      If one can establish such costs as reasonable and necessary in the prosecution of the work, then they may also be recovered. Central of Georgia R.R. Co. v. UST. & G., 223 Ala. 458, 137 So. 36 (1931)

   4. Services of Architects and Engineers.

      These items have been found to be “labor” and are thus recoverable. Price v. H.L. Cable Const. Co., 317 F. 2d 312 (5th Cir. 1963).

4. Statute of Limitations.

   First, the Alabama Little Miller Act requires notice prior to instituting any action thereunder. No action can be instituted on a bond until after 45 days written notice to the surety of the amount and nature of the claim. This notice is a condition precedent to the bringing of an action. Lloyd Wood Const. Co. v. Conn-Serve, Inc., 285 Ala. 409, 232 50 2d 649 (1970).

   All actions under the Little Miller Act must be instituted within one year of the date of final settlement of the general contract. Note that Section 39-1-1 requires certain notice and publication provisions prior to final settlement of a public works contract.

5. Bringing a Little Miller Act Claim.

   A civil action on a Little Miller Act bond may be brought in the county where the work is performed, or in any county where the contractor or his surety does business. The claim can be prosecuted against both the contractor and his surety, or either of them.

6. Defending a Little Miller Act Claim.

   The provisions of the bond itself are critical. The provisions of Section 39-1-1, however, will be read into the bond even if they do not otherwise appear. U.S.F. & G. v. Couch, Inc., 472 So. 2d 614 (Ala. 1985). Typical defenses include the argument that payment is not due, that the items claimed are not covered by the statute, lack of notice, and any contractual defenses exculpating the contractor.

7. Attorneys’ Fees and Interest.

   The Act provides that, in the event the contractor or surety fails to pay the claim in full within 45 days after the date the claimant mailed its requisite notice, [then] the claimant may recover a reasonable attorney’s fee plus interest from the date of the provision. This provision for attorneys’ fees applies only to payment bonds, not performance bonds. Cincinnati Ins. Co. v. City of Talladega, 342 So. 2d 331 (Ala. 1977). To recover attorney’s fees, the claimant must ultimately be found entitled to substantially the same amount claimed in his notice to the surety Columbus Rock Co. v. Alabama Gen. Ins. Co., 153 F. Supp. 827 (M.D. Ala. 1957)