Masonry Magazine April 2006 Page. 61
It is critical to know and understand the terms of the applicable bonds on your project and whether the bond coverage extends to you and your work.
In a recent Maryland decision of Nat'l Union Fire Insurance Co. of Pittsburgh, Pa. v. David A. Bramble, Inc., 879 A.2d 101 (Md. 2005), the court held that a surety had waived its defenses to the bond claim by failing to timely respond to a subcontractor's claim.
The subcontractor notified the surety on the general contractor's payment bond that it had not been paid in full by the general contractor. The bond required the surety to, among other things, send an answer to the claimant, within 45 days after receipt of the claim, stating the amounts of the claim that were undisputed and the sureties' basis for challenging any amounts that were disputed. Instead of providing the sub-contractor with the timely requisite answer, the surety ignored the bond requirements alleging that its failure to timely respond within the 45-day period evidenced that the claim was disputed. The court disagreed and found in favor of the subcontractor. From the subcontractor's standpoint, this case illustrates the strict requirements that must be followed by all parties touched by the bond.
Under the various Little Miller Acts, you can also expect to have state-specific notice and limitations provisions. You may also have contractual notice and limitations periods contained in the individual bonds that were issued on the project.
In Conclusion
Knowing the nuts and bolts of bonds on public projects may offer subcontractors with an opportunity to get paid where they otherwise would not. It is critical to know and understand the terms of the applicable bonds on your project and whether the bond coverage extends to you and your work. Being armed with this information is particularly important prior to bidding on a project and being able to fully assess whether the job is right for you.
Bradley J. Hansen, Esq., is an attorney with the Northern Virginia law firm of Hughes & Associates, P.L.L.C. He specializes in franchise, construction and complex civil litigation. Brad can be reached at brad@hughesnassociates.com, or by calling (703) 671-8200.
This article is not intended to provide legal advice, but to raise issues on legal matters. You should consult with an attorney regarding your legal issues, as the advice you may receive will depend upon your facts and the laws of your jurisdiction.
Smart Design = Dry Structures
epro Innovative Engineered Solutions for Commercial and Residential Waterproofing
Cavity Wall Air Barriers
Below-Grade Waterproofing
Retaining Wall Waterproofing
Masonry Sealers
Dry Laid Paver Stabilizer
A World of Difference
epro
Waterproofing Systems
epro Services, Inc.
800-882-1896-
www.eproserv.com
Dealer, Installer, and Representative Inquiries Welcomed