Surety Bond Quarterly - Summer 2015 - 19

Failure to Require General Contractors to Obtain Required Payment Bonds
is posted).
**None
NEBRASKA
*None
**Chicago Lumber Co. v. Sch.
Dist. No. 71, 227 Neb. 355 (1988)
(subcontractor could maintain
a negligence action against
school district for failure to
require payment bond).
NEVADA
*None
**Charlie Brown Constr. Co.
v. Boulder City, 106 Nev. 497
(1990) (subcontractor could
sue municipality for failing to
require payment bond required
by municipal code).
NEW HAMPSHIRE
*None
**None
NEW JERSEY
*None
**None
NEW MEXICO
*None
**None
NEW YORK
*None
**Davidson Pipe Supply Co. v.
Wyoming County Indus. Dev.
Agency, 85 N.Y.2d 281 (1995)
(overturning decision of the
trial court holding an industrial
development agency was liable
to unpaid subcontractor for
failure to ensure posting of bond
required by State Finance Law §
137, on grounds that the project
was not a "public improvement"
within the meaning of the
bonding statute; leaves open
the possibility of a private
cause of action against a public
owner for failure to require
a bond); Murnane Assocs. v.
Harrison Garage Parking Corp.,
239 A.D.2d 882 (N.Y. App. Div.
1997) (similar holding based on
finding that the project was not
a public improvement; does not
address lower court's finding
that the statute provides an
implied right of action against
the public owner for failure to
require a bond).
NORTH CAROLINA
*N.C. Gen. Stat. § 44A-32
(each contracting body shall
designate an official to require
the bonds described by the
Article; if the official designated

fails to require the bond, he
will be guilty of a Class 1
misdemeanor).
**James River Equip., Inc v.
Tharpe's Excavating, Inc.,
179 N.C. App. 336, 345 (2006)
(unpaid supplier had no cause
of action against county board
of education for failing to
require prime contractor to post
replacement bond when original
surety became insolvent,
although the Little Miller Act
does require the public entity
to ensure that bonding remains
in place throughout the life of
the project; the statute only
provides a misdemeanor
criminal penalty and does not
create a private civil cause
of action in favor of unpaid
subcontractors or suppliers).
NORTH DAKOTA
*None
**None
OHIO
*None
**Ray v. Buel, 50 Ohio App. 525
(1935) (town board of trustees
could not be held liable for
failure to require payment
bond); Art's Rental Equip.,
Inc. v. Bear Creek Constr. LLC,
2010 Ohio Misc. LEXIS 531
(Mar. 16, 2010) (Port Authority
not obligated by statute to
require bonds; even if statute
did require bonds, there
would be no private right of
action against a public entity
for failure to comply with the
statute).
OKLAHOMA
*None
**Boren v. Thompson &
Assocs., 2000 OK 3 (2000)
(absent an express statutory
provision, a school board
cannot be held liable to an
unpaid subcontractor for
failure to ensure that statutorily
required bonds are posted;
but project architect hired by
town to design the project and
oversee construction can be
held liable to subcontractor for
approving release of progress
payments to prime contractor
without ensuring that required
bonds had been posted).
OREGON
*Or. Rev. Stat. § 279C.625 (State
of Oregon or the public body

*Express Statutory Liability for Failure to Require Bond

§ 995.311, which creates a streamlined process for public owners to
verify the status of a surety on the
website of the State Department of
Insurance and provides owners a
safe harbor against claims for failure
to verify the sufficiency of the surety.
Thus, public owners now have a
simple way to verify the sufficiency
of sureties, and subcontractors and

and the officers authorizing the
contract shall be jointly liable
for the labor and materials used
in the performance of the work
for failure to require posting of
payment bond).
**Platt Elec. Supply, Inc. v. JC
Northwest, Inc., 159 Ore. App.
328 (1999) (public housing
authority liable to unpaid
subcontractor for failure to
require payment bond).
PENNSYLVANIA
*None
**Cassady-Pierce Co. v.
Spagnol, 160 Pa. Commw. 666
(1993) (court will not read an
implied private right of action
against public entity for failure
to require a bond if it is not
expressly stated in the statute).
RHODE ISLAND
*None
**Accent Store Design v.
Marathon House, 674 A.2d 1223
(R.I. 1996) (public entity has no
liability for failing to ensure that
prime contractor posts bonds).
SOUTH CAROLINA
*None
**Shirley's Iron Works,
Inc. v. City of Union, 403
S.C. 560, 574 (2013) (unpaid
subcontractor may sue
city for failure to require
payment bond under a thirdparty beneficiary breach of
contract theory; city's liability
is limited to unpaid contract
balances at the time it received
notice of subcontractor's claim;
city's obligation is only to
ensure that bond is posted; it
is not obligated to ensure that
a viable bond stays in place for
the life of the project).
SOUTH DAKOTA
*S.D. Codified Laws § 5-21-2
(public corporation liable to
unpaid subcontractors if it fails
to ensure that payment bond is
posted).
**Pete Lien & Sons v. City of
Pierre, 577 N.W.2d 330 (S.D.
1998) (statute did not apply
because the project was not
public improvement within the
scope of the bonding statute).
TENNESSEE
*Tenn. Code Ann. § 12-4-202
(if any public officer, whose
duty it is to award contracts,
awards any contract without

requiring payment bond in
compliance with § 12-4-201,
such officer commits a Class C
misdemeanor).
**None
TEXAS
*Tex. Gov't Code Ann. §
2253.027 (if a governmental
entity fails to obtain from a
prime contractor a payment
bond, the entity is subject to
the same liability that a surety
would have if the surety had
issued a payment bond and
if the entity had obtained the
bond).
**None
UTAH
*Utah Code Ann. § 14-1-19
(if the state or a political
subdivision fails to obtain
a payment bond, it shall,
upon demand by a person
who has furnished labor or
supplied materials to the
contractor or subcontractor
for the work provided for in a
contract subject to § 14-1-18,
promptly make payment to
that person).
**None
VERMONT
*None
**None
VIRGINIA
*None
**None
WASHINGTON
*Wash. Rev. Code § 39.08.015
(county, incorporated city
or town, or other municipal
corporation shall be liable
to unpaid subcontractors or
suppliers for failing to require
prime contractor to post bond).
**None
WEST VIRGINIA
*None
**None
WISCONSIN
*None
**Holmen Concrete Prods. Co.
v. Hardy Constr. Co., 2004 WI
App 165 (Wis. Ct. App. 2004)
(municipality liable to unpaid
subcontractors for failure to
require payment bond).
WYOMING
*None
**None

**Potential Liability Addressed by Courts

suppliers are protected against the
posting of bonds by unlicensed flyby-night sureties.
Although some jurisdictions have
recognized an implied cause of action
against public owners for failing
to ensure that payment bonds are
posted, most have declined to go
so far as to conclude that the public
owner has an obligation to ensure

that a valid payment bond remains in
place for the life of the project. In Flori
Corp. v. Yellow Rose Development &
Construction, 911 P.2d 546 (Ariz. Ct.
App. 1995), the contractor's surety
entered into liquidation during the
project and was unable to pay the
claims of subcontractors. The court
rejected the subcontractors' claims
Continued on page 38

NATIONAL ASSOCIATION OF SURETY BOND PRODUCERS | WWW.NASBP.ORG

19


http://WWW.NASBP.ORG

Table of Contents for the Digital Edition of Surety Bond Quarterly - Summer 2015

NASBP Upcoming Meetings & Events
2015-2016 NASBP Executive Committee
From the CEO - There is Poetry in Surety Claims, Surely
Practical Insights: What You Need to Know - Hiding in Plain Sight: Specifications as a Source of Risk
Profile: President Susan Hecker
Developing Your Leadership Vision
Liability Issues - Can Public Owners be Held Liable to Subcontractors and Suppliers for Failure to Require General Contractors to Obtain Required Payment Bond?
An Introduction to Probate Bonds
Class Act - Surety Team’s Cooperative Efforts Enable School to Open on Time
NASBP’s Attorney Advisory Council - Participants Opine on Current Risk Management Challenges and Business Opportunities
The AIA Describes Updated and Expanded Design-Build Documents Family
Contractor Practices That may Result in Construction Claims to Recover for Delays and increased Costs
NASBP Annual Meeting Speakers - Veterans can benefit private sector, but need help finding jobs
Index to Advertisers
Surety Bond Quarterly - Summer 2015 - cover1
Surety Bond Quarterly - Summer 2015 - cover2
Surety Bond Quarterly - Summer 2015 - 3
Surety Bond Quarterly - Summer 2015 - 4
Surety Bond Quarterly - Summer 2015 - 5
Surety Bond Quarterly - Summer 2015 - 6
Surety Bond Quarterly - Summer 2015 - 2015-2016 NASBP Executive Committee
Surety Bond Quarterly - Summer 2015 - From the CEO - There is Poetry in Surety Claims, Surely
Surety Bond Quarterly - Summer 2015 - 9
Surety Bond Quarterly - Summer 2015 - Practical Insights: What You Need to Know - Hiding in Plain Sight: Specifications as a Source of Risk
Surety Bond Quarterly - Summer 2015 - 11
Surety Bond Quarterly - Summer 2015 - Profile: President Susan Hecker
Surety Bond Quarterly - Summer 2015 - 13
Surety Bond Quarterly - Summer 2015 - Developing Your Leadership Vision
Surety Bond Quarterly - Summer 2015 - 15
Surety Bond Quarterly - Summer 2015 - Liability Issues - Can Public Owners be Held Liable to Subcontractors and Suppliers for Failure to Require General Contractors to Obtain Required Payment Bond?
Surety Bond Quarterly - Summer 2015 - 17
Surety Bond Quarterly - Summer 2015 - 18
Surety Bond Quarterly - Summer 2015 - 19
Surety Bond Quarterly - Summer 2015 - 20
Surety Bond Quarterly - Summer 2015 - 21
Surety Bond Quarterly - Summer 2015 - An Introduction to Probate Bonds
Surety Bond Quarterly - Summer 2015 - 23
Surety Bond Quarterly - Summer 2015 - 24
Surety Bond Quarterly - Summer 2015 - 25
Surety Bond Quarterly - Summer 2015 - 26
Surety Bond Quarterly - Summer 2015 - Class Act - Surety Team’s Cooperative Efforts Enable School to Open on Time
Surety Bond Quarterly - Summer 2015 - 28
Surety Bond Quarterly - Summer 2015 - 29
Surety Bond Quarterly - Summer 2015 - NASBP’s Attorney Advisory Council - Participants Opine on Current Risk Management Challenges and Business Opportunities
Surety Bond Quarterly - Summer 2015 - 31
Surety Bond Quarterly - Summer 2015 - The AIA Describes Updated and Expanded Design-Build Documents Family
Surety Bond Quarterly - Summer 2015 - 33
Surety Bond Quarterly - Summer 2015 - Contractor Practices That may Result in Construction Claims to Recover for Delays and increased Costs
Surety Bond Quarterly - Summer 2015 - 35
Surety Bond Quarterly - Summer 2015 - NASBP Annual Meeting Speakers - Veterans can benefit private sector, but need help finding jobs
Surety Bond Quarterly - Summer 2015 - 37
Surety Bond Quarterly - Summer 2015 - Index to Advertisers
Surety Bond Quarterly - Summer 2015 - cover3
Surety Bond Quarterly - Summer 2015 - cover4
Surety Bond Quarterly - Summer 2015 - outsert1
Surety Bond Quarterly - Summer 2015 - outsert2
Surety Bond Quarterly - Summer 2015 - 43
Surety Bond Quarterly - Summer 2015 - 44
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