Fourth Circuit Affirms Judgment in Favor of Miller Act Claimant Against Successor Company

In L&W Supply Corp. v. Greenway Enterprises, Inc., 2013 WL 583224 (4th Cir. Oct. 31, 2013), the Fourth Circuit affirmed the entry of summary judgment by the U.S. District Court for the Eastern District of Virginia under the Miller Act in favor of a supplier claimant who, despite not having a contract to supply materials with the subcontractor for the federal project, had an open account credit agreement with a predecessor to the subcontractor.

Greenway Enterprises had a contract with the federal government to improve a federal facility, and posted the necessary surety bond required by the Miller Act. Greenway Enterprises then subcontracted with LCJ Associates, LLC, a firm run by two individuals who had previously operated their business through a sole proprietorship known as LC Property Improvements. LC Property had an open credit account with the plaintiff, L&W Supply, which supplied materials for the federal project. When L&W received payment for only a portion of those materials, L&W sought to recover the balance from Greenway Enterprises and the surety.

The Fourth Circuit affirmed the District Court’s award of summary judgment in favor of L&W, explaining that L&W was a proper Miller Act claimant. The Court also rejected the claim that LCJ Associates and LC Property were distinct companies, and that L&W only had a contract with LC Property, because the individuals behind the two entities considered LCJ Associates to be the successor company to LC Property, treated LCJ Associates as the successor to LC Property, and paid for the materials from L&W with checks from LCJ Associates. The Fourth Circuit therefore affirmed the District Court’s ruling, explaining that LCJ Associates was indeed the successor company to LC Property, and, since L&W had a contract with LP Property, L&W was entitled to recover under the Miller Act for materials supplied to LCJ Associates.