Surety Bond Quarterly - Summer 2015 - 38

Continued from page 19

that the public owner was obligated
to not only ensure that a bond was
posted at the inception of the project,
but also to require the prime contractor to post a substitute bond after its
surety became insolvent.
Similarly, in Sloan Construction Co.
v. Southco Grassing, Inc., 395 S.C.
164 (2011), South Carolina's Supreme
Court declined to hold a public owner
liable for failing to ensure that a viable
payment bond remained in place for
the life of the project, after the surety
became insolvent and entered into
liquidation. The Michigan Appellate
Court came to a similar conclusion,
noting that, "it would be a herculean
task for those governmental units
which are engaged in a number of
public works projects at any given
time to continually check to ensure
that a payment bond is still in force
for each project and to determine the
identity of the various subcontractors

and suppliers and to advise them of
the status of the payment bond."
Barnes & Sweeney Enters v. City
of Hazel Park, 425 N.W.2d 572, 575
(Mich. 1988).
Conclusion
Thus, although an unpaid subcontractor may, under certain circumstances,
enforce its payment claims directly
against a public owner for failing to
ensure compliance with the bonding
requirements, it is extremely unlikely
that a court would find a public owner
liable for failing to ensure that a viable
bond remained in place through the
life of the project. This, of course,
poses a particular challenge to subcontractors and suppliers, who have
little ability to monitor the viability
of the bond during the course of
the project.
Even with a potential right of recovery directly against the public owner,

Index to Advertisers
ACCOUNTING
Albin, Randall & Bennett, CPAs ..........................25
www.arbcpa.com
BKD, LLP .............................................................29
www.bkd.com
CICPAC ......................................................... 20, 21
www.cicpac.com
Dayhill Group ..............................Inside Front Cover
www.dayhillgroup.com
E. F. Alvarez & Company, PA................................24
www.efacpa.com
ASSOCIATIONS
CICPAC ......................................................... 20, 21
www.cicpac.com
CPA FIRMS
BKD, LLP .............................................................29
www.bkd.com
E. F. Alvarez & Company, PA................................24
www.efacpa.com
Soren McAdam Christenson LLP.........................15
www.smc-cpas.com
FUNDS ADMINISTRATION
Dayhill Group ..............................Inside Front Cover
www.dayhillgroup.com

38

INSURANCE
Allstar Financial Group.........................................28
www.allstarfg.com
Freedom Specialty Insurance
Company ................................ Inside Back Cover
www.freedomspecialtyins.com
Selective Insurance Company of America ...........26
www.selective.com
SPECIALTY SURETY MARKET
Contractor Managing General
Insurance Agency Inc. .....................................24
www.cmgia.com
SURETY COMPANIES
Berkley Surety Group ............................................9
www.berkleysurety.com
Granite Re, Inc. ....................................................25
www.granitere.com
Liberty Mutual Surety ............................................4
www.libertymutualsurety.com
Merchants Bonding Co. .........................................3
www.merchantsbonding.com
South Coast Surety.................. Outside Back Cover
www.southcoastsurety.com
U.S. Small Business Administration ......................6
www.sba.gov/osg

SURETY BOND QUARTERLY | SUMMER 2015

a subcontractor's best course is still
to obtain a copy of the payment bond
prior to executing the subcontract.
Depending on the jurisdiction, the
subcontractor may even have an
established right to receive a copy
of the payment bond, either from the
contracting officer or the prime contractor. If the contractor fails to make
timely payments during the course of
the project, the subcontractor will be
in position to notify the surety on the
payment bond about unpaid amounts
due. Failing to be proactive about the
payment bond can leave the subcontractor holding the bag.
●
Todd R. Regan is a partner with
Robinson + Cole's Construction and
Surety Practice Group in Hartford,
Connecticut, and is licensed
to practice in Connecticut and
Massachusetts. He can be reached
at tregan@rc.com or 860.275.8293.

Are You Interested in the
Latest Surety Matters?
Surety Bond Quarterly

Do you have an interest in receiving
Surety Bond Quarterly? Visit www.
suretybondquarterly.org to sign up
to receive complimentary issues of
Surety Bond Quarterly. This NASBP
professional magazine is available
free to anyone digitally. You don't
have to be a NASBP member to
receive Surety Bond Quarterly.

If you are interested in a free, weekly
snapshot of the surety industry with
news from leading construction and
insurance industry resources, register for the NASBP SmartBrief e-newsletter at www.smartbrief.com/NASBP
and join the more than 3,700 others
who already receive this valuable
industry news. You don't have to be
a NASBP member to receive NASBP
SmartBrief.


http://www.arbcpa.com http://www.allstarfg.com http://www.bkd.com http://www.freedomspecialtyins.com http://www.cicpac.com http://www.suretybondquarterly.org http://www.selective.com http://www.dayhillgroup.com http://www.efacpa.com http://www.cmgia.com http://www.cicpac.com http://www.berkleysurety.com http://www.bkd.com http://www.granitere.com http://www.efacpa.com http://www.libertymutualsurety.com http://www.smartbrief.com/NASBP http://www.merchantsbonding.com http://www.smc-cpas.com http://www.southcoastsurety.com http://www.sba.gov/osg http://www.dayhillgroup.com

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
https://www.nxtbook.com/naylor/SBPQ/SBPQ0118
https://www.nxtbook.com/naylor/SBPQ/SBPQ0417
https://www.nxtbook.com/naylor/SBPQ/SBPQ0317
https://www.nxtbook.com/naylor/SBPQ/SBPQ0217
https://www.nxtbook.com/naylor/SBPQ/SBPQ0117
https://www.nxtbook.com/naylor/SBPQ/SBPQ0416
https://www.nxtbook.com/naylor/SBPQ/SBPQ0316
https://www.nxtbook.com/naylor/SBPQ/SBPQ0216
https://www.nxtbook.com/naylor/SBPQ/SBPQ0116
https://www.nxtbook.com/naylor/SBPQ/SBPQ0415
https://www.nxtbook.com/naylor/SBPQ/SBPQ0315
https://www.nxtbook.com/naylor/SBPQ/SBPQ0215
https://www.nxtbook.com/naylor/SBPQ/SBPQ0115
https://www.nxtbook.com/naylor/SBPQ/SBPQ0414
https://www.nxtbook.com/naylor/SBPQ/SBPQ0314
https://www.nxtbook.com/naylor/SBPQ/SBPQ0214
https://www.nxtbookmedia.com