By D. Kim Lough, Special to AZ Big Media
Sub-subcontractors and suppliers working on public projects in Arizona are now required to serve preliminary 20-day notices for asserting a bond claim by registered or certified mail. A recent Arizona Court of Appeals (Division 2) opinion changed the requirement of this common practice, which previously assumed that service by first-class mail with a certificate was sufficient under the Arizona Little Miller Act.
In Cemex v. Falcone Brothers & Associates, Inc., general contractor Falcone was working on a city of Tucson public works improvement project. Falcone provided a statutory payment bond to protect unpaid subcontractors and vendors who perfected their bond claims. Cemex was acting a material supplier for J&S Commercial Concrete Contractors, a subcontractor to Falcone, on the project. Cemex alleged that it was unpaid for the materials and sued both Falcone and its bonding company.
Falcone claimed that it had not received any of the four preliminary 20-day lien notices which Cemex claimed to have served. Cemex served its preliminary 20-day notices by first-class mail and received a Certificate of Mailing from the post office. State lien law allows a service of a preliminary 20-day notice by first class mail with a certificate of mailing. The Court found that the method of service of a preliminary 20 day notice for lien purposes had not been incorporated in to the Little Miller Act provisions when the Act was last amended.
Falcone’s argument that the provisions of the state law require service be made by registered or certified mail was adopted by the Court and it was determined that the practice of service by first class mail with a certificate of mailing was insufficient to protect a bond claim under the Arizona Little Miller Act for claimants that did not have a direct contract with the general contractor.
The court acknowledged that its opinion “may have a negative impact on an apparently long-standing industry practice.” While sub-subcontractors and suppliers on public works projects now should modify this business practice, non-bonded private construction projects do not have this same new requirement.
D. Kim Lough is a construction law and litigation partner with Jennings, Haug & Cunningham. He can be contacted at DKL@JHC-Law.com.