Ninth Circuit Overturns Precedent, Finds Miller Act’s One-Year Statute of Limitations Is a Claim-Processing Rule, Not a Jurisdictional Requirement

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First In United States ex rel. Air Control Technologies, Inc. v. Pre Con Industries, Inc., --- F.3d ---, 2013 WL 3242673 (9th Cir., June 28, 2013), the Ninth Circuit Court of Appeals held that the one-year statute of limitations under the Miller Act is not a jurisdictional requirement, overruling its prior decision in United States ex rel. Celanese Coatings v. Gullard, 504 F.2d 466 (9th Cir. 1974).

 

The prime contractor on a construction project for the U.S. Veterans Administration, Pre Con Industries, entered into a subcontract with Air Control Technologies. In December 2008, after beginning work on the project, Air Control encountered job site conditions that made the work more expensive than it originally anticipated. In November 2009, Pre Con terminated Air Control when Air Control demanded reimbursement for its unanticipated costs. In March 2011, Air Control sued Pre Con for breach of contract and Pre Con’s Miller Act surety under its Miller Act payment bond.

 

The defendants moved to dismiss the complaint for lack of jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. The defendants argued that Air Control’s suit was barred by the one-year statute of limitations under the Miller Act, which the Ninth Circuit previously held to be a jurisdictional requirement in Celanese Coatings. As is proper with a factual attack in a motion to dismiss on jurisdictional grounds, the defendants submitted materials outside the pleadings to establish that Air Control’s complaint was untimely. The district court granted the motion, finding that, based on the materials outside the pleadings presented by the defendants, Air Control could not demonstrate that it performed labor or supplied materials to the project within one year of filing its complaint.

 

On appeal, the Ninth Circuit reconsidered the issue of whether the Miller Act’s one-year statute of limitations is a jurisdictional requirement or, alternatively, a claim-processing rule. If the statute of limitations is deemed to be a jurisdictional requirement, then Rule 12(b)(1) applies and a district court may properly consider materials outside the pleadings. If the statute of limitations is deemed to be a claim-processing rule – i.e., a non-jurisdictional rule “to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times” – then Rule 12(b)(1) does not apply and a district court may not properly consider materials outside the pleadings. Instead, the Rule 12(b)(6) failure to state a claim analysis applies and a district court may only consider the well-pleaded allegations of the complaint in question, not any extrinsic materials.

 

A three-judge panel of the Ninth Circuit overruled Celanese Coatings as irreconcilable with intervening higher authority; namely, recent U.S. Supreme Court decisions adopting a bright line rule for determining whether a particular statute of limitations creates a jurisdictional or a non-jurisdictional requirement. See, e.g., Henderson ex rel. Henderson v. Shinseki, --- U.S. ---, 131 S. Ct. 1197, 1202 (2011). Specifically, Congress must clearly state that a given statute of limitations is jurisdictional; otherwise it should be treated as non-jurisdictional claim-processing rule.

 

Here, because the Miller Act does not clearly state that the one-year statute of limitations is jurisdictional, the Ninth Circuit held that it should be treated as a claim-processing rule. The appeals court vacated the district court’s order granting the defendants’ motion to dismiss and remanded the case for further proceedings because under a Rule 12(b)(6) failure to state a claim analysis, Air Control did not allege in its complaint that it had not furnished labor or materials within one year of filing suit. Put differently, when looking only at the well-pleaded allegations of Air Control’s complaint and not any extrinsic materials, it was not clear whether the complaint was time-barred.

 

In practice, this change may make it tougher and more expensive for sureties and contractors to defeat untimely Miller Act claims at the pleadings stage, possibly forcing defendants to incur expenses of initial disclosures and discovery prior to bringing a summary judgment motion.

 

Topics:  Claim Procedures, Miller Act, Personal Jurisdiction, Statute of Limitations

Published In: Civil Procedure Updates, General Business Updates, Construction Updates, Government Contracting Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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