An electrical subcontractor claimed that it incurred extra labor and material costs of $110,641 on Jefferson Barracks in St. Louis. The subcontractor sued the prime contractor in U.S. District Court and included a Miller Act payment bond claim.

The subcontractor claimed the problems on the project were extreme. It noted that the project was scheduled for completion in six months but, because of delays caused by the federal government, took more than 22 months. The subcontractor sought to use the total cost method to calculate its damages.

The District Court permitted the subcontractor to present total cost damage evidence, but instructed the jury that the subcontractor had to prove, among other things, that the prime contractor had "some responsibility in causing [the subcontractor]'s actual losses." The subcontractor objected to this instruction because its case was premised on delays and disruptions caused by the government. The District Court overruled the subcontractor's objection, and the jury returned a verdict in favor of the prime contractor.

On appeal, the subcontractor argued that the jury instruction was in error because the Miller Act permits a subcontractor to recover its additional costs of labor and materials regardless of the fault of the general contractor. The prime contractor cited Nebraska Public Power District v. Austin Power, Inc., 773 F.2d 960 (8th Cir. 1985) to support its argument that when seeking to use the total cost method, a subcontractor must prove that the general contractor "had some responsibility in causing the subcontractor's losses."

The appellate court agreed with the subcontractor and reversed the District Court, concluding that "the total cost method can be used to calculate damages under the Miller Act, regardless of the fault of the general contractor," because "general contractors have privity of contract with the government and can thus recover delay damages directly from the government, while the subcontractors cannot." Lighting & Power Services, Inc. v. Roberts, 354 F.3d 817 (8th Cir. 2004).

The court distinguished Austin Power and other cases holding that to recover damages using the total cost method, a subcontractor must prove that the defendant is responsible for the subcontractor's loss. The court observed that these cases dealt with breach of contract claims, where the jury is required to find that the defendant is the "cause in fact" of the damages sustained by the subcontractor. The court distinguished these cases on the ground that under the Miller Act, the subcontractor need not prove that the general contractor was responsible for the subcontractor's losses and concluded the breach of contract cases had no applicability to a claim brought under the Miller Act. Subcontractors can recover delay damages under the Miller Act whether or not the general contractor is at fault.

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©2004 Thelen Reid Brown Raysman & Steiner LLP