United States District Court, N.D. Illinois, Western Division
The United States of America, for the use and benefit of Alliance Mechanical, Inc., et al., Plaintiffs,
Alacran Contracting, LLC, et al., Defendants.
REPORT AND RECOMMENDATION
D. JOHNSTON UNITED STATES MAGISTRATE JUDGE
this Court's Report and Recommendation that
Plaintiff's complaint be dismissed as untimely. It is
further this Court's recommendation that Liberty Mutual
Insurance Company's Motions in Limine 
 be denied. Any objection to this Report and
Recommendation must be filed by March 27, 2018. Failure to
object may constitute a waiver of objections on appeal.
See Provident Bank v. Manor Steel Corp., 882 F.2d
258, 260 (7th Cir. 1989).
Alliance Mechanical, Inc. (“Alliance”), brings
this action against Defendants, Alacran Contracting, L.L.C.
(“Alacran”) (as assignee of Weatherproofing
Technologies, Inc. (“WTI”)) (Counts I &
II) and Liberty Mutual Insurance Co. (“Liberty”)
(Count I only). Liberty is the surety under a payment bond
(“Bond”) which Alacran was required to provide
under the Miller Act as the prime contractor on a project to
renovate the Bachelor Officers' Quarters at Fort McCoy,
Wisconsin (“the Project”). WTI was a
subcontractor on the Project. Alliance was a plumbing
subcontractor to WTI on the Project.
Miller Act provides that on any contract of more than $100,
000 for “the construction, alteration, or repair of any
public building or public work of the Federal
Government” the contractor must supply “[a]
payment bond with a surety satisfactory to the officer for
the protection of all persons supplying labor and material in
carrying out the work provided for in the contract for the
use of each person.” 40 U.S.C. § 3131(b)(2). A
payment bond, in the penal sum of $1, 313, 429.60 was
supplied for the Project with Alacran as principal and
Liberty as surety, binding both principal and surety jointly
and severally. In Count I of its Second Amended Complaint,
Alliance seeks to recover from Liberty under the payment bond
for sums Alliance claims are due from Alacran for labor and
materials supplied on the Project prior to April 7, 2009.
See Alliance's Second Amended Complaint at 3,
April 7, 2015, Judge Reinhard entered an order of default
against Alacran. Apr. 7, 2015 Court order, Dkt. 163. On July
18, 2016, Judge Reinhard ruled on the remaining parties'
cross-motions for summary judgment. See July 18,
2016 Court Order, Dkt. 248. Judge Reinhard denied
Alliance's and Liberty's cross-motions. Id.
Judge Reinhard found that Liberty presented evidence
suggesting Alliance's claim was untimely filed, but
determined there was a genuine issue of material fact as to
the date labor or materials were last supplied. Id.
Judge Reinhard encouraged the parties to reevaluate the
possibility of settlement or proceed with an evidentiary
hearing to determine whether the action was timely filed.
Id. The parties were unable to resolve this case
with a settlement. Accordingly, Judge Reinhard referred this
case to the undersigned for an evidentiary hearing on the
issue of timeliness. Feb. 3, 2017 Minute Entry, Dkt. 263.
October 11, 2017, the Court held the evidentiary hearing.
Alliance and Liberty submitted trial briefs before the
hearing and several exhibits were admitted during the
hearing. Alliance's Trial Brief, Dkt. 268; Alliance's
Exhibits, Dkt. 270; Liberty's Trial Brief, Dkt. 271;
Liberty's Exhibits, Dkt. 301. Alliance stood on the
evidence it presented in a related case in which another
subcontractor (Sunlee) on the same Project similarly sought
to recover from Alacran. See Case No. 10 CV
50067. Specifically, Alliance relies on the
affidavit of Ryan Cole (Sunlee's general manager) with
attachments that included subcontractor invoices, and the
deposition testimony of Fort McCoy employee Mary Purpus with
attached contract progress reports and contract inspection
forms for the Project. Alliance's Exhibit List, Dkt.
Liberty called Ryan Cole, Dai Bui (Alacran's owner), and
James Kocourek (Sunlee's former construction
administrator) during the hearing.
March 17, 2010, Alliance filed its original complaint for
damages under the Miller Act, 40 U.S.C. §§ 3131-34.
The Miller Act requires that “[a]n action brought under
this subsection must be brought no later than one year after
the day on which the last of the labor was performed or
material was supplied by the person bringing the
action.” 40 U.S.C. § 3133(b)(4). “The [Act]
is remedial and to be liberally construed, but the giving of
notice and bringing of suit within the prescribed time is a
condition precedent to the right to maintain the
action.” United States ex rel. Material Serv. Div.
of Gen. Dynamics Corp. v. Home Indem. Co., 489 F.2d
1004, 1005 (7th Cir. 1973). Accordingly, to be timely filed
on March 17, 2010, the last labor performed or material
supplied by Alliance must have occurred by March 17, 2009.
Judge Reinhard previously determined, Alliance has the burden
to prove that its action was timely filed. See July
18, 2016 Court Order at 3, Dkt. 248; see also Nov.
22, 2016 Court Order at 2, Dkt. 258 (upholding that finding
after a motion to reconsider). Moreover, to collect under the
Miller Act, Alliance must prove the following elements: (1)
that labor and materials were supplied for work in the
particular contract at issue; (2) that the supplier is
unpaid; (3) that the supplier had a good faith belief that
the labor and materials were for the specified work; and (4)
that the jurisdictional requirements were met, namely that
Alliance filed the instant complaint within the one year
statute of limitations period. See United States ex rel.
Aldridge Electric Co. v. Pickus Construction & Equipment
Co., 98 C 3261, 2000 U.S. Dist. LEXIS 1511, at *8 (N.D.
Ill. Feb. 7, 2000), remanded by 249 F.3d 664 (7th
Cir. 2001); United States ex rel. Allied Roofers Supply
Corp. v. Blinderman Construction Co., No. 86 C 5655,
1986 U.S. Dist. LEXIS 16257, at *4 (N.D. Ill.Dec. 18, 1986).
The parties' dispute is limited to the fourth element.
argues that it provided labor and materials to the Project as
late as April 7, 2009,  the date it was terminated from the
Project. In contrast, Liberty argues that
Alliance's last day was March 6, 2009, the date Liberty
contends that Alliance abandoned the Project. Accordingly,
the Court must determine whether Alliance furnished labor or
materials through March 17, 2009, one year before it filed
suit, or whether it abandoned the Project earlier as asserted
Alliance's burden at the hearing to show that it
performed labor or supplied materials on March 17, 2009 or
later. Alliance claims to have presented “irrefutable
evidence establishing that subcontractors were indeed working
and supplying materials or equipment rentals on and after
March 17, 2009, making the complaint timely as a matter of
law.” Alliance's Trial Brief at 2, Dkt. 268.
Alliance asserts that in determining the last day of work on
the Project, “the Court must consider any work
performed by any subcontractors.” Id.
(emphasis added). Accordingly, Alliance focuses on the work
of Sunlee's subcontractors to satisfy the statute of
advance of the hearing, Alliance provided an affidavit from
Ryan Cole stating that seven Sunlee subcontractors provided
labor and/or materials to the Project through March 25, 2009.
Ryan Cole's Affidavit dated Jan. 5, 2016, Dkt. 270-4.
Attached to the affidavit were invoices from the seven
subcontractors. Exhibits A-H, Dkt. 270-4. Ryan Cole averred
that the subcontractor invoices “are all records made
and kept in the course of Sunlee's regularly conducted
business activity, are records that are routinely made or
received and kept in the course of Sunlee's business, in
the [sic] Sunlee's usual practice, were made or received
at or near the time of the event that they record, and were
made or received by a person with knowledge, or from
information transmitted by a person with knowledge, and who
reported such knowledge in the regular course of
business.” Ryan Cole's Affidavit dated Jan. 5,
2016, Dkt. 270-4 at 4.
filed two Motions in Limine to bar the majority of
Ryan Cole's affidavit and the attached invoices as either
irrelevant or inadmissible hearsay. Liberty's Motions
in Limine, Dkts. 297-298. The Court took these
matters under advisement until after development of a factual
record during the hearing.
Court rejects Liberty's first argument that this evidence
is irrelevant under Federal Rules of Evidence 401 and 402.
See Liberty's Motion in Limine, Dkt.
298. The Miller Act requires that “[a]n action brought
under this subsection must be brought no later than one year
after the day on which the last of the labor was performed or
material was supplied by the person bringing the
action.” 40 U.S.C. § 3133(b)(4) (emphasis
added). Furthermore, the labor and materials must by
furnished “in carrying out work provided for in a
contract.” 40 U.S.C. § 3133(b)(1). In this case,
Alliance, not Sunlee, had a subcontract with WTI for work on
the Project. See United States ex rel. Am. Civil
Construction, LLC v. Hirani Engineering, 263 F.Supp.3d
99, 111 (D.D.C. 2017) (finding that “the statute of
limitations begins to run when the subcontractor bringing
suit ‘last' performed labor or supplied materials
for ‘work provided for' in the subcontract”).
Alliance presented evidence during the parties' summary
judgment briefing that Sunlee and Alliance had a cooperative
agreement wherein they agreed to share personnel for work
performed on the Project. Ryan Cole's Affidavit dated
Nov. 16, 2015 at 3, Dkt. 206-11; see also Exhibit 1
(Cooperative Agreement), Dkt. 206-12. However, Sunlee and
Alliance remained separate entities, and Sunlee did not have
a contract with WTI. See July 18, 2016 Court Order
at 5, 7, Dkt. 248. Accordingly, Judge Reinhard previously
determined that “Sunlee was providing labor and
supplies to the project through its cooperative agreement
with Alliance not through any direct relationship with
WTI.” Id. Therefore, although not explained at
the evidentiary hearing, the Court finds this evidence
sufficient for Alliance to rely on the work of Sunlee when
determining timeliness. The Court recommends denying
Liberty's Motion in Limine to bar the evidence.
Liberty's argument about hearsay, at the hearing, Ryan
Cole testified that Sunlee received the attached invoices,
but that he relied on the subcontractors to provide proper
billing and invoicing. Ryan Cole further testified that he
called most of the subcontractors sometime in March 2009.
Ryan Cole testified that he typically spoke with the owner of
the business or someone in their accounting department, but
for these calls was unsure whom he spoke with. He also did
not ask the subcontractors how they prepare their invoices or
records and did not recall what specific invoices he spoke
with the subcontractors about. He testified that
subcontractors generally send an invoice within 30 days of
service, sometime sooner, but he never testified that he
confirmed any of the work or materials on these seven
subcontractors' invoices was performed or provided on or
after March 17, 2009.
to Federal Rule of Evidence 902(11), Ryan Cole's
affidavit relating to the attached invoices must meet the
requirements set forth in Federal Rule of Evidence
803(6)(A)-(C), “as shown by certification of the
custodian or another qualified person” that:
“(A) the record was made at or near the time by-or from
information transmitted by-someone with knowledge;
(B) the record was kept in the course of a regularly
conducted activity of a business, organization, occupation,