by:  Mark Cobb

An Atlanta payment bond claim, a Marietta payment bond claim, a Coweta County payment bond claim, an Athens, Clarke County payment bond claim, a Fort Benning, Georgia payment bond claim, and a Savannah payment bond claim.  This is my week so far!

Since the Cobb Law Group’s construction law practice has been so busy with filing and perfecting claims against payment bonds this week, we thought our readers might appreciate hearing some of our ideas on the payment (and nonpayment) trends that we are seeing!

So far this week, we have initiated six payment bond claims.  Although the mechanics lien attorneys at the Cobb Law Group also typically file numerous mechanics and materialmen lien claims in Atlanta and throughout Georgia each week, so far, we haven’t filed any new Claims of Liens.  We monitor our clients’ files very carefully, and since almost all of our clients are construction professionals (in particular, they are specialty subcontractors and material suppliers), we have the advantage of noticing trends affecting the industry before others.  Also, since we have been focused on Georgia subcontractor law for over 20 years, we recognize the cyclical nature of the trends and can see the big-picture.

Unfortunately, the U.S. economy is not recovering as quickly as we need; our little feelers indicate certain geographic pockets experiencing slight increases in construction, but other areas continue to be stagnant. Although they are not as plentiful as we would like to see, there are government public works projects providing construction contracts to subcontractors and purchasing construction materials from suppliers.  Without spending too much time on this (we’ll save it for another blog article), government projects are subject to difficult bidding procedures and, increasingly, bid preferences for local contractors which greatly limit the playing field for legitimate, regional contractors.  Nonetheless, there are some government construction projects out there which are providing necessary work.

PAYMENT BOND DEADLINES:

Government projects are notoriously slow-paying which means that subcontractors and suppliers have to vigilantly monitor their (i) 60-day deadline from the date a Georgia lien or bond waiver was signed to file an Affidavit of Nonpayment if they haven’t received payment, and (ii) 90-day deadline from the last day they were on the job to make their claim against the surety backing the payment bond.

MILLER ACT AND BABY MILLER ACT:

Furthermore, federal construction projects are governed by the Miller Act; State of Georgia construction projects are governed by Georgia’s version of the Miller Act which is referred to as the Little Miller Act.  It is essential that everyone understand that these two Acts–although parallel in many respects–differ substantially!

Because the government projects are slow-paying, our clients are asking us to timely file their claims against the projects’ payment bonds.  As mentioned, above, our Georgia payment bond lawyers have initiated six new claims so far this week.  All six of these claims were approaching the deadlines in which a valid claim could be made.

It is interesting to note, however, that of the six claims we have begun in the last day or so, we have settled (or almost resolved) four of them!  Here’s the break-down:

• payment of  two of the payment bond claims have been paid in full via joint-check;
• payment of two of the payment bond claims have been promised by the general contractor within the next 30 to 45 days; and
• two of the payment bond claims have not yet received a response (but we are hopeful they will get paid quickly!).

ENFORCE YOUR BOND RIGHTS TO GET PAID:

So, what exactly does this little study show?  Slow-pay is not “no-pay”, but you will probably have to exercise your legal rights to make a claim against the payment bond in order to get paid; in four out of our six examples, 2 have been paid and 2 are promised to be paid.  Thus, our clients have already released two payment bond claims, and two others have been suspended pending payment by the surety or the general contractor.  That’s recovery of 2/3 of the cases in a matter of hours after bringing a payment bond construction lawyer on board.  Prime contractors understand the government’s slow-pay mechanism; however, as the entity posting the bonds, it is the prime contractors’ credit rating which is affected by a subcontractor’s or materialmen’s claim; thus, it is in the best interest of the general contractor to pay the third-tier supplier or subcontractor rather than face increased premiums in the future.

We firmly believe that if our clients had not made their payment bond claims before the statute of limitation ran, they would not have received payment.  Making these claims is a wonderful tool in the arsenal of Georgia subcontractors and suppliers to make sure that payment is made.  If you need to discuss nonpayment issues on a public works project with our Georgia payment bond attorneys, please contact us today.