Tag: Surety

Is Settling a Bond Claim in the Face of a Seemingly Clear Statute of Limitations Defense Bad Faith?

We have often discussed payment and performance bonds here at Construction Law Musings, most often in the context of payment bond claims relating to federal and state-owned. construction projects.  A late 2020 case out of the Eastern District of Virginia federal court examined what happens after such a claim, in this case, based upon a developer’s subdivision bonds, is made and negotiations commence between the surety and the claimant.  Specifically, Fidelity & Deposit Co. of Maryland v. Ramsgate Corp., et. al. looked at claims for indemnity by a surety and the principal/indemnitors in the event that the Surety settled such a claim.

In the Ramsgate case, Surety provided two separate subdivision subcontract bonds to Ramsgate.  Pursuant to those bonds and the indemnity clause of its indemnity agreement, the Surety sought reimbursement of its $80,000.00 settlement payment to the local building authority that it paid to resolve what was originally a claim for over $420,000.00 by the City.  The project was started in 2002 and after many years of failures to complete (according to the City of Suffolk), the City made its claim for expenses in 2017.  Ramsgate claimed that it completed the subdivisions in 2003. Continue reading Is Settling a Bond Claim in the Face of a Seemingly Clear Statute of Limitations Defense Bad Faith?

Don’t Let Receivership Kill Your Miller Act Claim

Originally posted 2013-01-01 10:00:19.

Naval Air Station Oceana (Photo credit: Wikipedia)

In this economy, even the companies that provide bonding for construction companies may have financial difficulties, and even go into receivership.  Recently, the U. S. District Court in Norfolk, VA decided an interesting case relating to an interestingly named project.  In U.S. v. Western Ins. Co., the court considered the default of one such company, Western Ins. Co..

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A Relatively Small Exception to Fraud and Contract Don’t Mix

English: Alexandria, Virginia U.S. Custom Hous...
English: Alexandria, Virginia U.S. Custom House and Post Office (1900) Completed in 1858. Architect: Ammi B. Young (Photo credit: Wikipedia)

Remember all of my posts about how fraud and contract claims don’t usually play well in litigation?  Well, as always with the law, there are exceptions.  For instance, a well plead Virginia Consumer Protection Act claim will survive a dismissal challenge.

A recent opinion out of the Alexandria division of the U. S. District Court for the Eastern District of Virginia sets out another exception, namely so called fraudulent inducement.  In XL Specialty Ins. Co. v. Truland et al, the Court considered the question of whether both a tort and contract claim can coexist in the same lawsuit when the tort claim is based upon the information provided to the plaintiff when that information proves false.

Continue reading A Relatively Small Exception to Fraud and Contract Don’t Mix

No Setoff Between Bonded and Non-Bonded Projects

English: Alexandria, Virginia U.S. Custom House and Post Office (1900) Completed in 1858. (Photo credit: Wikipedia)

As any reader of Construction Law Musings knows, payment bond claims are a big part of my law practice.  You have also likely read through the federal cases relating to the Miller Act that you can find here.  On trend in these federal cases in the Virginia district courts is that determining set off rights on bonded federal projects is not necessarily and easy exercise.

Another recent case continues this trend.  In Hanover Ins. Co. v. Blueridge General Inc. the U. S. District Court for the Eastern District of Virginia considered set off rights of a general contractor in the following situation.  The defendant in this case, Blueridge General Inc was forced to terminate a masonry subcontractor on two separate projects.  In the construction project at issue in the current case, Hanover Insurance Co., completed the masonry subcontractor’s work at Langley Air Force Base and then sought payment for that work from Blueridge.

Continue reading No Setoff Between Bonded and Non-Bonded Projects

Deadline Nears for “Green Performance Bond” Implementation

For this weeks Guest Post Friday at Musings, we welcome Surety Bonds.com, a leading online surety provider. SuretyBonds.com specializes in educating current and prospective business owners about local surety requirements. To keep up with surety bond trends, follow and Surety Bonds Insider blog and @suretybond on Twitter.

Professionals who work in the construction industry know the laws that regulate the market change constantly. Unfortunately, even government agencies are flawed, which means they sometimes establish nonsensical, arbitrary regulations that leave construction professionals even more confused as to how they’re expected to do their jobs.

For example, back in 2007 government agencies in Vancouver had to rework laws that mandated certain green building stipulations in regard to roofs.  The city essentially created a law so risky that no insurance company would provide insurance for projects related to green roof building due to the high risk for potential claims. Because insurance companies refused to issue the necessary coverage to contractors, work could not begin on any new projects until the law was reworked. Construction professionals and surety providers alike are worried this kind of hindrance could result when Washington D.C.’s 2006 Green Building Act goes into effect in January.

According to section 6b of the act:

On or before January 1, 2012, all applicants for construction governed by section 4 shall provide a performance bond, which shall be due and payable prior to receipt of a certificate of occupancy.

The bond, which could be worth up to $3 million, would be forfeited if a building should fall short of expected green building standards (such as LEED certification) outlined within the act.

Continue reading Deadline Nears for “Green Performance Bond” Implementation

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