U.S. District Court in Puerto Rico, Applying Connecticut Law, Considers Application of Notice Requirements to Termination of Joint Subcontractors

Fed. Ins. Co. v. Empresas Sabaer, Inc.
2013 U.S. Dist. LEXIS 112930 (D.P.R. Aug. 9, 2013)

This action arose out of a surety’s claim for expenses incurred for correcting a subcontractor’s defective work. DTC Engineering and Constructors, LLC (“DTC”) and the U.S. Army Corps of Engineers (the “Corps”) entered into a contract for the design and construction of the Armed Forces Reserve Center at Fort Buchanan, located in Guaynabo, Puerto Rico. Federal Insurance Company (“Federal”) and DTC subscribed to a payment and performance bond as surety and principal, respectively, naming the government as obligee. DTC subsequently entered into a subcontract (the “Subcontract”) with Empresas Sabaer, Inc. (“Sabaer”) and BBS Developers, S.E. (“BBS”) (collectively the “Subcontractors”). The Subcontract provided that Sabaer was required to complete the work under Subcontract, while BBS was responsible for providing technical and economic support. United Surety and Indemnity Co. (“USIC”) and the Subcontractors, as surety and principal, respectively, subscribed to a payment and performance bond and named DTC as obligee. DTC assigned to Federal all of its rights emerging from the Subcontract and USIC’s bond.

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New Jersey Appellate Division Rules Conditional Character of Surety’s Commitment to Provide Performance Bond Made Contractor’s Bid Nonresponsive

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”