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Eleventh Circuit Court Of Appeals Affirms Trial Court’s Interpretation Of What Constitutes Acceptance For Statute Of Limitations Purposes For Actions On Payment Bonds

In Devin B. Strickland v. Arch Insurance Company, No. 17-10610, 2018 WL 327443 (11th Cir. Jan. 9, 2018), the Eleventh Circuit Court of Appeals affirmed the District Court’s determination that Strickland’s claim against the bond surety was time-barred due to his waiting more than one year after the completion of the contract and the acceptance by the public authority to bring suit.

Strickland provided sand to Douglas Asphalt Paving Company (“Douglas”) for a Georgia Department of Transportation (“GDOT”) road improvement project. Arch issued a payment bond on behalf of Douglas for the project in 2003. In 2007, Douglas was terminated and in accordance with its performance bond obligations, Arch took over Douglas’s work and arranged for completion of the project by a third-party contractor.

In August 2010, GDOT determined that the work on the project was substantially complete and ready for final inspection. Based upon GDOT’s determination that some of the work completed was non-conforming, the project was not accepted as complete at that time.

In September 2012, Strickland sent a demand letter to Arch demanding payment under the payment bond. Arch acknowledged the claim and asked for additional documentation and a proof of claim.

Strickland took no further action until it filed suit in August 2014. In September 2014, GDOT sent a letter of “final acceptance,” which stated that the project had “been accepted” by GDOT as of April 17, 2012.

Arch filed Summary Judgment seeking dismissal of Strickland’s claim, arguing that it was barred by the applicable one year statute of limitations. Strickland maintained that although GDOT may have noted it had accepted the work as of April 17, 2012, because it had not sent its letter of final acceptance until September 2014, the suit was timely.

The Eleventh Circuit was unpersuaded by Strickland’s argument. It felt that the letter of final acceptance sent by GDOT had no relation to the completion or the actual acceptance of the work. The Court noted that language of the statute plainly triggers the limitations period at acceptance, not “final acceptance.” It reasoned that if it were to adopt Strickland’s interpretation, that final acceptance hinged on a public authority’s internal policy and procedure as to when letters are sent and that would frustrate the purpose of the statute. The Court held although GDOT waited until 2014 to send an acceptance letter, the letter made clear that GDOT had accepted the work in 2012 and the statute was triggered at that time. The Court concluded that Strickland’s suit in 2014 was untimely.

This case is a good reminder as to the importance of timely requesting payment and determining when work is accepted, especially when completing work for public authorities. Courts will strictly construe limitations periods and a contractor will not be afforded additional time simply because an owner or public authority waits to provide written documentation of acceptance in accordance with its own internal policies or procedures.