The opinion of the court was delivered by: GESELL
The federal project here involved concerns construction of the Joseph H. Hirshhorn Museum and Sculpture Garden in Washington, D.C. Piracci obtained the contract on a bid basis and in computing its bid included the amount it had agreed on with use plaintiff for the performance of the subcontract work. The job was then delayed nineteen months primarily through a controversy between the general contractor and the General Services Administration.
When the work eventually went forward use plaintiff found it had increased costs caused by the delay, including standby expenses and added outlays for materials and labor required by the job. In particular, five categories of increased actual expenses are claimed in this suit: (1) increased cost of labor due to performance of the work at a period when higher wage rates were in effect; (2) increased cost of materials due to higher prices at the later time; (3) increased labor costs due to inefficient performance stemming from the piecemeal, disjointed method of work caused by the delay; (4) increased cost of field operations due to the longer time of actual job performance resulting from the delay; (5) increased indirect expenses, composed of home office overhead and general and administrative (G&A) expenses.
Aetna takes the position that it is bound on its Miller Act bond
only to pay the amount specified in the subcontract for the work, and this amount has already been paid. Aetna argues the increased costs of performing must be met solely by a separate contract action between use plaintiff and the general contractor, and the surety must be relieved of further obligation. Use plaintiff claims to the contrary, stating that the Miller Act by its terms entitles it to be reimbursed by the surety for these added costs. No claim is made for lost or expected profits, only labor and materials and related expenses incurred.
(a) Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished under section 270a of this title and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him . . . 40 U.S.C. § 270b(a) (1970).
The purpose of this statute has been explained by the Supreme Court:
Section 270a(a)(2) of the Miller Act establishes the general requirement of a payment bond to protect those who supply labor or materials to a contractor on a federal project. Ordinarily, a supplier of labor or materials on a private construction project can secure a mechanic's lien against the improved property under state law. But a lien cannot attach to government property . . ., so suppliers on government projects are deprived of their usual security interest. The Miller Act was intended to provide an alternative remedy to protect the rights of these suppliers. F. D. Rich Co. v. United States for the use of Industrial Lumber Co., Inc., 417 U.S. 116, 121-22, 94 S. Ct. 2157, 2161, 40 L. Ed. 2d 703 (1974).
Although enacted as a replacement for state lien law, the Miller Act provides a federal cause of action, and the scope and substance of recovery are governed by federal rather than state law. F. D. Rich, supra, 417 U.S. at 126-31, 94 S. Ct. 2157. "The Miller Act is '. . . highly remedial [and] entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects.' MacEvoy, supra [Clifford F. MacEvoy Co. v. United States ex rel. Tomkins Co.], 322 U.S.  at 107, 64 S. Ct.  at 893 [88 L. Ed. 1163 (1944)]." F. D. Rich, supra, 417 U.S. at 124, 94 S. Ct. at 2162. Under the statute, use plaintiff is entitled to the "sum or sums justly due him."
By its terms, however, the Miller Act is limited to claims for "labor or material [furnished] in the prosecution of the work provided for in [the] contract . . . ." The issue thus becomes whether delay costs as alleged in this case are expenses for "labor or material" within the intendment of the statute. The Court holds that the Miller Act surety is liable to a subcontractor for increased costs actually incurred due to delay for labor or material, to the extent such delay is not attributable to the subcontractor.
Moreover, the Miller Act, like the mechanic's lien for which it substitutes, is premised on "the equity in favor of those whose actual expenditure of work or utilization of material has enhanced the value of the property in question," Arthur N. Olive Co. v. United States ex rel. Marino, 297 F.2d 70, 72 (1st Cir. 1961). "The essential principle upon which the mechanic's lien rests is that of unjust enrichment," In re Taylorcraft Aviation Corp., 168 F.2d 808, 811 (6th Cir. 1948), overruled on other grounds, In re Kurtz Roofing Co., 335 F.2d 311 (6th Cir. 1964), aff'd sub nom. United States v. Speers, 382 U.S. 266, 86 S. Ct. 411, 15 L. Ed. 2d 314 (1965). Applying equitable considerations, the Court finds that the expense of such beneficial and productive efforts be measured as of the time the work was actually performed. This accords with decisions under the Miller Act involving restitution or quantum meruit, in which it has been held that "the standard for measuring the reasonable value of the services rendered is the amount for which such services could have been purchased from one in the plaintiff's position at the time and place the services were rendered." United States for Use of Building Rentals Corp. v. Western Casualty and Surety Co., 498 F.2d 335, 338 (9th Cir. 1974) (emphasis added), quoting United States for Use of Coastal Steel Erectors, Inc. v. Algernon Blair, Inc., 479 F.2d 638, 641 (4th Cir. 1973).
In the Court's view, the proper test under the Miller Act is whether the claim for relief is based on actual expenditures for labor or materials utilized in the performance of the subcontract. See United States for Use and Benefit of Moran Towing Corp. v. Hartford Accident & Indemnity Co., 204 F. Supp. 353, 356 (D.R.I.1962). Use plaintiff's cause of action is not defeated by such technical exercises as analyzing whether the claim arose within or without the contract or by determining if the added costs were indispensible to satisfactory contractual performance.
Defendant Aetna relies primarily on Arthur N. Olive Co. v. United States ex rel. Marino, supra, 297 F.2d 70; L. P. Friestedt Co. v. U. S. Fireproofing Co., 125 F.2d 1010 (10th Cir. 1942); and United States to Use of Watsabaugh & Co. v. Seaboard Surety Co., 26 F. Supp. 681 (D.Mont.1938), aff'd on other issue, 106 F.2d 355 (9th Cir. 1939).
However, these cases are of no avail to defendant. Unlike the instant litigation, they dealt with attempts by subcontractors to recover from Miller Act sureties "unrealized gain or profit for breach" of contract, Arthur N. Olive Co., supra, 297 F.2d at 72. Here, use plaintiff performed and completed its contractual ...