Substantial Completion, Completion and Acceptance Are Not the Same
The Court of Appeals in Georgia recently deemed a supplier’s suit action was untimely, because the supplier failed to comply with filing suit within one year from substantial completion of the project.
Ah, What’s in a Date?
Dates are imperative in accurately determining mechanic’s lien and bond claim rights and the deadlines associated with securing those rights.
What dates? No, not your plans for Saturday night or the peculiar fruit often found in fruit cake.
Dates as in calendar dates, or significant events. Dates may include first & last furnishing dates, date of project completion and the date of final acceptance.
Completion is the date of fulfillment of the prime contract for the work of improvement. Acceptance is an official act where entry is made in the government records that a public work under a contract is completed and accepted.
Then there’s that word: substantial. As if tracking lien and bond claim deadlines weren’t tricky enough, there is this added caveat of “substantial.”
While it seems the definition of substantial may end up in a judge’s hands to determine, generally items such as punch list work, warranty work, remediation and small shipments don’t qualify as substantial.
Georgia, on My Mind & in the Courts
If you are furnishing to a public project in Georgia, you should serve the bond claim within 90 days from last furnishing and file suit to enforce the bond claim after 90 days from last furnishing, but within one year from completion and acceptance of the project.
In this case, the claimant filed its suit action nearly four years after the project was deemed substantially complete, arguing that its maintenance and repair obligations extended the date of project completion.
Jane Fox Lehman reviewed the recent court decision in her article Eleventh Circuit Holds That the Statute of Limitations on Payment Bond Claim Under Georgia Law Commences at Substantial Completion Rather Than Final Acceptance.
According to Lehman’s review, the owner deemed the project substantially complete in 2010, the punch list work was completed, and final acceptance occurred in 2011. In 2014, the claimant discovered the owner was closing out the project and the claimant brought the suit action against the payment bond. Regardless of whether calculating from substantial completion or final acceptance, the claimant was far beyond the one year mark.
But, getting back to completion vs. acceptance “The Court of Appeals noted that Georgia’s statute of limitations on payment bond claims commenced at the “completion of the actual construction work and acceptance thereof by the public authority,” and that Georgia courts had construed the term “completion” to mean not just total completion, but also substantial completion with only punch list items remaining.”
When its arguments on completion date(s) were lost, the supplier tried to argue the statute of limitations had not expired, because the payment bond remained active.
“Finally, the Court rejected Strickland’s argument that the statute of limitations had not run because the payment bond remained in “full force and effect” until all suppliers were paid, and Strickland had not been paid. Strickland’s interpretation would render the statute meaningless because the limitations period would never begin where a supplier or subcontractor had not been paid.”
What’s a Supplier to do?
For starters, pay attention! If I look at the sheer amount of time that passed where the supplier wasn’t paid, I can’t help but think “Why are you waiting years to pursue payment?!” Suppliers need to carefully monitor deadlines and act accordingly. The laws are there to protect you, but you must take steps to closely adhere to the requirements.
In this case, Georgia’s statute is quite clear on time limits:
“No action can be instituted on the payment bonds or security deposits after one year from the completion of the contract and the acceptance of the public works construction by the proper public authorities.” – O.C.G.A. § 36-91-95
