Whiting-Turner Contracting Co. v Guar. Co. of N. Am. USA, 2019 BL 97923 (Colo. App. Mar. 21, 2019).

This construction dispute involved rights and obligations under a performance bond supplied for an office building construction project in Denver, Colorado.  Whiting-Turner Contracting Company was the general contractor, and it subcontracted Klempco Construction to construct an anchor system for the project’s underground parking garage.  Klempco provided performance and payment bonds for the project from Guarantee Company of North America USA (“GCNA”).  When Klempco fell behind schedule, it stopped paying its sub-subcontractors and directed Whiting-Turner to assume responsibility for its work and sub-subcontractors.

Continue Reading Colorado Court of Appeals Finds Contractor Satisfied Conditions Precedent Under Performance Bond

Strickland v. Arch Ins. Co., No. 17-10610, 2018 U.S. App. LEXIS 504 (11th Cir. Jan. 9, 2018)

Strickland provided sand to a paving company (“Douglas”) for a Georgia Department of Transportation (“GDOT”) road improvement project (the “Project”).  Arch Insurance Company (“Arch”) issued payment and performance bonds on Douglas’s behalf.  In 2007, GDOT declared Douglas in default and removed it from the Project.  In accordance with the performance bond, Arch arranged for a third-party contractor to complete Douglas’s work on the Project. Strickland did not supply sand after Douglas’s removal.
In August 2010, GDOT determined that the Project was substantially complete, and in September 2010, performed final inspection and generated a punch list.  Arch’s contractor completed the punch list by September 2011.  In March 2012, GDOT accepted Project maintenance responsibilities because the Project had been satisfactorily completed as of September 2011.  GDOT made semi-final payment to Arch in July 2012.

In September 2012, Strickland sent a demand for payment on Arch’s payment bond.  Arch acknowledged the claim and asked for additional documentation.  Strickland did not respond.  In 2014, Strickland learned that GDOT was preparing to close out the Project and filed a lawsuit against Arch.


Continue Reading Eleventh Circuit Holds That the Statute of Limitations on Payment Bond Claim Under Georgia Law Commences at Substantial Completion Rather Than Final Acceptance

United States ex rel. Metro Mech., Inc. v. Triangle Constr. Co.,  2018 U.S. Dist. LEXIS 1487 (S.D. Miss. Jan. 4, 2018)

Triangle Construction Company, Inc. (“Triangle”) contracted with Mississippi Portfolio Partners III, LP (“Mississippi Partners”) to serve as the prime contractor on four apartment complex construction projects (the “Projects”) in Mississippi.  Triangle subcontracted the HVAC and plumbing work to Metro Mechanical, Inc. (“Metro”).  After Metro completed its work, Metro filed suit in the Federal District Court under the Miller Act, to collect sums due from Triangle and its payment bond surety.  Triangle moved to dismiss, asserting that the Court was without Miller Act jurisdiction because the projects and contracting parties were private.

The Miller Act requires contractors on “public work[s] of the Federal Government” to obtain payment bonds for the protection of subcontractors and suppliers.  See 40 U.S.C. § 3131.  To that end, the Millers Act also creates a civil action in federal court in favor of any “person that has furnished labor or material in carrying out work provided for” under a Miller Act contract and “that has not paid in full within 90 days.” 40 U.S.C. 3133(b)(1).  The District Court applied two alternative tests to determine whether the Projects were “public works of the Federal Government subject to the Miller Act.”


Continue Reading Federal Court in Mississippi Holds That Although Projects Were Constructed With Federal Funds, They Were Not “A Public Work of the Federal Government” and Therefore the Court Had No Jurisdiction Over a Subcontractor’s Claim Under the Miller Act, Where the United States Was Not a Contracting Party and the Projects Were Not Constructed on Federal Property

Berks Products Corp. v. Arch Ins. Co.
72 A.3d 315 (Pa. Commw. Ct. 2013)

Note: A petition for allowance of appeal from this decision has been filed with the Pennsylvania Supreme Court, but has not been acted upon as of January14, 2014.

This action arose from a payment bond secured by a general contractor for work performed on a public school building. Skepton Construction, Inc. (“Skepton”) entered into an agreement with the Wilson Area School District (the “District”) to be the general contractor for the construction of a new intermediate school (the “Project”). Under its agreement with the District, Skepton was required to secure a payment bond in order to guarantee its payment obligations. Skepton secured its payment bond through Arch Insurance Company (“Arch”). The payment bond (the “Bond”), in relevant part, stated: “[I]f the Principal and any subcontractor of the Principal to whom any portion of the work under the Agreement shall be subcontracted,…promptly shall pay or cause to be paid, in full, all money which may be due any claimant supplying labor or materials…, then this Bond shall be void; otherwise this Bond shall be and shall remain in force and effect.”


Continue Reading Pennsylvania Commonwealth Court Interprets Payment Bond Language to Waive Bond Law “Safe Harbor” Against Double Payment

Hartford Fire Insurance Co. v. City of Mont Belvieu
2010 U.S. App. Lexis 14277 (5th Cir. July 13, 2010)

The Court of Appeals for the Fifth Circuit recently held that a Texas City’s bond claim was time barred under the statute of limitations and equitable remedies based on estoppel were unavailable to revive claims on the bond.

Hartford Fire Insurance Company issued a performance bond for a contractor constructing a public recreational facility for the City of Mont Belvieu, Texas. The bond was a requirement under Texas public work contracts. By statute, the bond was subject to a one-year limitations period commencing from project final completion. The project progressed with numerous delays and changes. However, the City issued a certificate of occupancy in mid-2001, taking possession and operating the facility by July 2002.

At that time, numerous punch list items remained and several subcontractors owed payment by contractor filed claims on a payment bond. Hartford advised the City to be cautious when releasing further payment to contractor. Thereafter, in July 2002, City paid contractor almost $675,000 as an equitable adjustment via a change order. Critically, the change order stated that the project’s completion date was July 19, 2001.


Continue Reading U.S. Court of Appeals for the Fifth Circuit Holds Performance Bond Claim Time Barred – Estoppel Excuse Not Available to City

Raito, Inc. v. Cardi Corp.
2010 R.I. Super LEXIS 61 (R.I. Super. April 10, 2010)

Cardi contracted with the State of Rhode Island for the construction of a new bridge over the Providence River on Interstate I-95. Cardi subcontracted with Raito to install a series of concrete foundation shafts for the bridge. With regard to the subcontract, Raito, as principal, and Western Surety Company, as surety, executed a standard AIA A312 performance bond.


Continue Reading Rhode Island Court Holds Incorporated Subcontract Terms Regarding Termination Did Not Vitiate Obligation of Notice to Surety Under AIA A312 Performance Bond

James J. Gory Mechanical Contracting Inc. v. Travelers Casualty & Surety Co.
2010 Phila. Ct. Com. Pl. Lexis 20 (Phila. CCP Feb. 8, 2010)

In February 2005, Surety issued payment bond of over $45 million on behalf of the general contractor for construction of student housing project at Temple University. Under terms of the payment bond, any claim, suit or action had to be brought within two years of bond’s issuance. General contractor entered into plumbing subcontract with Plaintiff, who certified that its work was 100% complete in October 2006. However, general contractor only paid Subcontractor for 95% of the work it completed.


Continue Reading Pennsylvania Common Pleas Court Upholds Payment Bond Contractual Limitation Period

North Amer Spec Ins. Co. v. Ames Corp./Dawson Building Contractors, Inc. JV
2010 U.S. Dist. LEXIS 25748 (S.D. Fla. Mar. 10, 2010)

Defendant Ames Corporation/Dawson Building Contractors, Inc. (Ames/Dawson), as general contractor, engaged American Roofing, LLC (American Roofing) to perform roofing work at the Veterans Administration Medical Center located in West Palm Beach, Florida. Plaintiff North American Specialty Insurance Company (NAS), as surety, issued performance bonds on behalf of American Roofing, naming Ames/Dawson, as obligee.


Continue Reading U.S. District Court in Florida Rules Performance Bond Claims Barred By Obligee’s Failure to Declare Default and Its Performance of Corrective Work Without Affording Surety Opportunity to Cure

Nova Crete, Inc. v. City of Elizabeth
2010 N.J. Super. Unpub. LEXIS 101 (N.J. Super. Ct. App. Div. Jan. 15, 2010)

The Court held that the consent of surety submitted by Nova Crete, Inc. (“Nova Crete”) did not comply with the bid specifications provided by the City of Elizabeth because its issuance was conditioned on an event other than the award of the contract to Nova Crete, and it therefore did not comply with the applicable New Jersey statute. Furthermore, this defect was material and could not be waived or cured. As a result, Elizabeth properly determined that Nova Crete was not the lowest responsible bidder on the project.
Continue Reading New Jersey Appellate Division Rules Conditional Character of Surety’s Commitment to Provide Performance Bond Made Contractor’s Bid Nonresponsive

American Manufacturers Mutual Insurance Co. v. Payton Lane Nursing Home, Inc.
2010 U.S. Dist. LEXIS 8537 (E.D.N.Y. Feb. 2, 2010)

The United States District Court for the Eastern District of New York (“EDNY”) recently considered whether a surety could maintain a breach of contract claim against a construction project owner’s architect based upon the architect’s alleged wrongful certification of payments occurring prior to the execution of a takeover agreement. In rendering its opinion, the EDNY concluded that expert opinions were not required where the claim sounded in contract, rather than in tort. The EDNY also found that summary judgment was defeated because there remained genuine issues of material fact as to the extent of the architect’s scope of construction phase services and whether the architect failed to satisfy its construction phase service obligations.
Continue Reading U.S. District in New York Denies Architect’s Motion for Summary Judgment Seeking Dismissal of Claim By Surety of Defaulted Contractor for Damages Due to Architect’s Alleged Improper Certification of Contractor’s Payment Applications