Both the Materialman and the Subcontractor testified that the material delivered to the job site on November 21, 1978 was an explosion proof receptacle and plug for a public address system. The Subcontractor testified that this receptacle and plug were items which were included in the construction contract and/or a change order and were not repair or replacement items. Mr. Alan Shea, who was a construction representative for the Navy at the job site, testified that the public address system installed on the job site was operational in December 1977 and was accepted by the Navy when it beneficially occupied the job site in December 1977. He further stated that the public address system malfunctioned in the summer of 1978 and, as a result, the explosion proof receptacle and plug for the public address system were repaired or replaced sometime thereafter. On the basis of the evidence heretofore discussed, the Court finds that the Materialman has failed to carry its burden of proving that the items delivered to the job site on November 21, 1978 were included in the construction contract and/or a change order. The notice letter of the Materialman dated January 17, 1979 was therefore not timely under the section 270b(a) because it was not delivered within 90 days of the furnishing of the last material by the Materialman which was included in the construction contract and/or a change order.
As previously stated, the record shows that the Materialman sent appropriate notice letters on December 8, 1977 and January 17, 1979. The General Contractor admits that in August 1978 the Materialman supplied materials for the job which were included in the construction contract and were not repair or replacement materials. Therefore, the action filed by the Materialman on February 16, 1978 was untimely and affords the Materialman no right of recovery because it was filed before the Materialman furnished the last of the materials under the construction contract for which it claims payment. 40 U.S.C.A. § 270b(a); Marmet Corp. v. Frank Briscoe Co., 382 F.2d 906 (6th Cir. 1967). The action filed by the Materialman on December 1, 1978 relies on a last delivery date for material of August 10, 1978, but no notice letter was sent by the Materialman within 90 days of August 10, 1978. Section 270b(a), however, also provides that a materialman need not comply with the 90 day notice provisions of that section if the materialman has entered into a "contractual relationship express or implied" with the general contractor. 40 U.S.C.A. § 270b(a); Hesselden, supra. Since the Materialman filed two actions within one year of its furnishing of the last material included in the construction contract, 40 U.S.C.A. § 270b(b), the Materialman is not barred from recovery by the 90 day notice provision of section 270b(a) if there was a contractual relationship between it and the General Contractor.
As previously stated, from sometime early in 1977 until approximately November 1977 the Materialman received payment for materials supplied to the job site by checks issued each month by the General Contractor which were jointly payable to the Subcontractor and the Materialman. In November 1977, the Materialman notified the General Contractor that it would not extend further credit to the Subcontractor and that no further orders would be accepted for the job until the unpaid balance was paid. The Materialman and the General Contractor then entered into an agreement, the terms of which were confirmed by a letter dated December 1, 1977 from the Materialman to the General Contractor. As previously stated, this letter acknowledged receipt of $ 29,528.78 from the General Contractor and stated that the General Contractor agreed to pay the Materialman $ 10,000.00 every thirty days until the unpaid balance on the subcontractor's account, which was $ 30,673.85 after receipt of the $ 29,528.78 check, was paid. The letter also stated that the General Contractor agreed to pay for any future orders of material for the job site within thirty days after delivery. The Materialman received no further payments from the General Contractor. The General Contractor acknowledged that he conferred with the Materialman in November 1977, that he sent a check to the Materialman at that time for $ 29,528.78, and that he received the Materialman's December 1, 1977 letter and did not reply. On the basis of this evidence, the Court finds that the Materialman and the General Contractor, on or about December 1, 1977, entered into a "contractual relationship," and that the Materialman is therefore relieved from the 90 day notice requirement of section 270b(a). Gramercy, supra.
The Subcontractor testified that all of the materials ordered by it for which the Materialman has not been paid (Exhibit P1-1 through 1-141) were installed on the job site. As previously stated, the Materialman testified that the total balance of the 141 invoices for which payment has not been received is $ 50,634.58. The Court therefore finds that the Materialman is entitled to recover $ 50,634.58 for these materials. Pomona Tile, supra.
The Materialman may also recover for the service charges which accrued on the unpaid balance of the Subcontractor's account. Each bill of the Materialman to the Subcontractor stated that a service charge of 11/2% per month would be imposed on any unpaid balances outstanding for more than sixty days. The Materialman testified that its records showed an accumulated service charge of $ 38,583.38. The General Contractor contends that it is not liable for the service charge, but did not dispute the amount of the service charge which had accrued. In D&L Construction Co. v. Triangle Electric Supply Co., Inc., 332 F.2d 1009 (8th Cir. 1964), the Eighth Circuit held that the liability of the general contractor and sureties to a materialman under the Miller Act is governed by the contract pursuant to which the materialman furnished materials to the subcontractor. In this action, each of the Materialman's bills to the Subcontractor specifically provided that a service charge of 11/2% per month would be imposed on balances outstanding for longer than sixty days. The Court therefore finds that the Materialman may recover the service charge in the amount of $ 38,583.38. D&L Construction, supra; Continental Casualty Co., Inc. v. Allsop Lumber Co., Inc., 336 F.2d 445 (8th Cir. 1964).
For the reasons set forth in this Memorandum, the Court will enter a verdict and judgment in favor of the Materialman and against the General Contractor, National and American in the amount of $ 89,217.96, which represents $ 50,634.58 for materials for which the Materialman did not receive payment and $ 38,583.38 for the service charges which accrued on the Subcontractor's account. This Memorandum is in lieu of findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a). An appropriate order will accordingly be entered.