Federal Miller Act and New York Public Payment Bonds: Different Deadlines

Reviewed September 7, 2026.

A payment bond can provide a recovery route when a contractor or supplier is unpaid on public work. First identify the public owner, the governing law, the claimant's contractual tier and the actual bond.

Federal projects

Under 40 USC § 3133, qualifying unpaid claimants generally must wait 90 days after their last covered work or materials before suing. A claimant contracting directly with a subcontractor, but not with the bonded contractor, must give that contractor the required notice within 90 days. Suit generally must begin within one year after the claimant's last labor or materials. Notice and suit are separate requirements.

The current FAR 28.102-1 generally requires payment and performance bonds for covered federal construction contracts exceeding $150,000, subject to its exceptions; smaller contracts may require alternative payment protection.

New York state and local projects

State Finance Law § 137 uses different rules, including a 120-day notice requirement for specified lower-tier claimants and a suit deadline tied to completion and acceptance of the public improvement, with a stated statutory exception. Do not import federal deadlines into a New York bond claim. Obtain the executed bond and preserve all potentially applicable deadlines promptly.

Kushnick Pallaci PLLC assists clients throughout New York with payment-bond claims and disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Mount Vernon v. Nova: The Court of Appeals on a Surety’s Diversion Defense

Reviewed September 7, 2026.

The 2010 appellate decision discussed in the original article was affirmed by the Court of Appeals in Mount Vernon City School District v. Nova Casualty Co., 19 NY3d 28 (2012). The surety remained liable under its performance bond after the contractor defaulted.

At the contractor's request, the school district had transferred approximately $214,000 of earned contract funds to the Department of Labor. The surety argued that the transfer improperly diverted funds and discharged its obligation. The Court did not decide whether that transfer violated the Lien Law. The nonperforming surety lacked standing as a subrogated trust beneficiary, and it failed to establish the material alteration or actual prejudice needed for its discharge theory.

Do not treat the decision as permission to divert funds

The ruling addresses this surety's defenses on a particular record. Owners and contractors still need to evaluate trust-fund restrictions and payment instructions before redirecting project money.

The Court also distinguished completion expenses from attorney fees incurred suing the surety: the bond did not unmistakably authorize recovery of the latter. Review the actual bond language before assuming that litigation fees are recoverable.

Kushnick Pallaci PLLC assists clients throughout New York with performance-bond and surety disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Surety Liability and the Face Amount of a Lien-Discharge Bond

Reviewed and updated September 7, 2026. This case note concerns a December 29, 2009 decision.

In Casa Redimix Concrete Corp. v. Cosner Construction Corp., 68 A.D.3d 673 (1st Dept. 2009), the court distinguished the contractor's debt from the surety's obligation under a lien-discharge bond.

The bond limited the surety's liability

The trial judgment awarded the subcontractor $261,197.60 plus $162,879.96 in prejudgment interest, together with costs and disbursements, against the contractor and surety. The Appellate Division reduced the surety's liability to the bond's $288,000 face amount.

The court explained that the undertaking limits the surety's liability, with interest potentially running from the surety's own default. Because the surety was not in default here, prejudgment interest on the contractor's debt could not increase the surety's liability above the bond amount. The procedure for seeking an additional undertaking also did not expand the original surety's contractual obligation.

What to check in a bonded lien claim

Obtain the actual bond, identify the parties and amount, and distinguish the claim against the contractor from the claim against the surety. Do not assume that a judgment against one establishes the amount recoverable from the other.

For assistance evaluating a bonded lien, see Kushnick Pallaci PLLC's information on mechanic's lien enforcement and construction litigation.

This historical case note is general information. The applicable bond, procedural history and current law must be reviewed for a particular claim.