Supreme Court of South Carolina Finds Public Owner’s Failure to Require General Contractor’s Compliance with Statutory Bond Requirements Supports Cause of Action by Subcontractor Against Owner under South Carolina Statute

Sloan Constr. Co. v. Southco Grassing, Inc.
2008 S.C. LEXIS 99 (S.C. Mar. 24, 2008)

The South Carolina Department of Transportation (SCDOT) contracted with general contractor Southco Grassing, Inc. in connection with state highway maintenance project and, in accordance with the applicable statutory bond requirements, Southco provided a payment bond for the benefit of its subcontractors and suppliers in the full contract amount. Subsequently, Southco entered into a subcontract with subcontractor Sloan to perform asphalt paving work. In June 2001, before the paving work was completed, Southco’s payment bond was cancelled when the bond’s issuer became insolvent. Notice of the insolvency and cancellation was provided to SCDOT and SCDOT requested in writing that the Southco provide a replacement bond within seven days. Southco did not reply. In the meantime, Sloan completed its work, but in January 2002 notified SCDOT that it still had not received payment from Southco for its subcontract valued at approximately $52,000 and that the payment bond had never been replaced. In March 2003, despite that it had not made full payment to Sloan, Southco advised SCDOT that it had made all payments on the project, and SCDOT released final retainage to Southco. Continue reading “Supreme Court of South Carolina Finds Public Owner’s Failure to Require General Contractor’s Compliance with Statutory Bond Requirements Supports Cause of Action by Subcontractor Against Owner under South Carolina Statute”

New Jersey Federal Court Holds that New Jersey Public Works Bond Act and Trust Fund Act Bars A General Contractor from Setting Off Potential Claims on Private Project Against Amounts Owed to Subcontractor on a Public Project

Atlantic City Associates LLC v. Carter & Burgess Consultants, Inc.
2008 U.S. Dist. LEXIS 25144 (D.N.J. Mar. 27, 2008)

The United States District Court for the District of New Jersey recently had to decide whether it was proper for a general contractor to set off potential claims on a private project against amounts owed to the same subcontractor on a public project. Relying upon the New Jersey Public Works Bond Act and New Jersey Trust Fund Act, the District Court concluded that it was improper for the general contractor to set off the amounts because a contractual setoff provision was insufficient to rise to the level of a waiver of the subcontractor’s rights under the Acts. Continue reading “New Jersey Federal Court Holds that New Jersey Public Works Bond Act and Trust Fund Act Bars A General Contractor from Setting Off Potential Claims on Private Project Against Amounts Owed to Subcontractor on a Public Project”

Florida Court Holds That Contractor’s Failure To Provide Notice Of Default In Accordance With Terms Of Performance Bond Discharged Surety From Its Obligations

Current Builders of Florida, Inc. v. First Sealord Surety, Inc.
2008 Fla. App. LEXIS 4698 (April 2, 2008)

The Court of Appeals of Florida held that a jury finding that a contractor which terminated a subcontractor failed to provide notice in accordance with the terms of a performance bond was sustainable, given that the contractor did not tender the remaining contract balance to the surety or give it an opportunity to provide for the completion of the work. Accordingly, the surety’s obligations under the bond were not triggered. Continue reading “Florida Court Holds That Contractor’s Failure To Provide Notice Of Default In Accordance With Terms Of Performance Bond Discharged Surety From Its Obligations”