Grunley, a prime contractor on a public work project, entered into a design-build contract with the federal government. In the performance of its work, Grunley subcontracted with IES.
Grunley experienced unanticipated changes and delays in the performance of its contract, and these changes and delays led to a dispute between Grunley and IES. The dispute was not resolved, and IES filed a claim against Grunley’s payment bond sureties under the Miller Act (40. U.S.C. §§ 3131 et seq.).
Grunley intervened in IES’ lawsuit and filed a breach of contract action against IES. IES counterclaimed for breach of contract, alleging that Grunley violated the Prompt Payment Act (31 U.S.C.§§ 3901–3907).
At issue before the Court was Grunley’s motion to dismiss IES’ claim under the Prompt Payment Act.
Specifically, Grunley argued:
(1) that there is no private right of action under the PPA;
(2) that the parties’ payment-related dispute rendered the PPA inapplicable; and
(3) because the federal government had not yet paid Grunley, the monies sought by IES were not yet due, thereby rendering IES’ claim premature.
Citing other jurisdictions that have found no private cause of action to exist under the Prompt Payment Act, the Court dismissed IES’ Prompt Payment Act claims. See In re Thomas, 255 B.R. 648, 654 (Bankr.D.N.J.2009); United States ex rel. King Mountain Gravel, LLC v. RB Constructors, LLC, 556 F.Supp.2d 1250, 1252–53 (D.Colo.2008); U.S. ex rel. Virginia Beach Mech. Servs., Inc. v. SAMCO Constr. Co., 39 F.Supp.2d 661 (E.D.Va.1999); Transamerica Premier Ins. Co. v. Ober, 894 F.Supp. 471 (D.Me.1995).
In finding for Grunley by dismissing IES’ Private Payment Act claim, the Court observed that Congress did envision “the PPA’s protections to be enforced in the same manner as other contractual disputes.” However, “neither the text of the PPA nor the legislative history reveal an intent to create a private right of action.”
Reconciling these statements, the implication appears to be that the Prompt Payment Act may be included as part of a breach of contract action, but not an independent claim/private cause of action.
U.S. ex rel. IES Commercial, Inc. v. Cont’l Ins. Co., Inc., CIV. A. 11-0985 ESH, 2011 WL 4526018, — F.Supp.2d — (D.D.C. Sept. 30, 2011).