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Payment bonds protect subcontractors, sub-subcontractors, and others who provide labor and materials for a public project. Subcontractors and others who want to make a payment bond claim must follow the legally-required steps. The required steps depend on the type of project (e.g., federal and state government projects) and the role of the company making the claim (e.g., subcontractor, sub-subcontractor, supplier to sub-subcontractor, etc.). If you do not follow the steps by the required deadlines, you may lose your payment bond rights.

This post provides a high-level overview of the steps that must be taken to perfect a payment bond claim on most Florida state and federal public projects.Continue Reading How to Make a Payment Bond Claim on a Public Project

Many construction payment disputes come down to one key question—who is responsible for extra costs incurred while building a project? Parties frequently have competing breach-of-contract actions that focus on who is liable. But a recent federal court case shows that you should not give short shrift to the damages that flow from the alleged breach.

In Barlovento, LLC v. AUI, Inc., Civ. No. 18-1112 GJF/JHR, 2021 WL 3879072 (D.N.M. Aug. 31, 2021), the United States Air Force awarded a general contractor a $5.5 million contract to renovate a taxiway at a military base. The general contractor then subcontracted the removal and replacement of the taxiway pavement and base course. This required the subcontractor to place three layers – subgrade, base course, and concrete.

The subcontractor fell behind in its performance of the work, and ultimately, the general contractor held a meeting with the subcontractor and a potential replacement subcontractor that would perform almost all the remaining work. At that meeting, the general contractor announced that it would take the concrete paving work away from the subcontractor. Despite the decision to de-scope the original subcontractor, the general contractor ended up terminating the subcontractor for default.Continue Reading General Contractor Awarded $22,000 of Its $1.3 Million Claim Against a Subcontractor

Pay-if-paid clauses make a prime contractor’s payment to a subcontractor contingent on the prime contractor receiving payment from the project owner. A recent federal court case illustrates how the failure to include a pay-if-paid clause can end up with a prime contractor paying one of its subcontractors out of pocket.

In Phillips and Jordan, Inc. v. McCarthy Improvement Co., a prime contractor was awarded a design-build contract for the construction of a $31 million roadway project for the South Carolina Department of Transportation. The prime contractor, in turn, entered into a unit-price subcontract with a dirt-work contractor to excavate and place soil at the project.Continue Reading Subcontractor Awarded $3.3 Million for Extra Work on a Roadway Project

In United States ex rel. Aarow/IET LLC v. Hartford Fire Insurance Company, an electrical subcontractor sued a general contractor and the payment bond surety for $2.9 million in additional labor costs incurred on a federal government project. The subcontractor alleged that the general contractor mismanaged the project and disrupted the subcontractor’s work. The general contractor filed a motion to dismiss, which the trial court granted because, among other reasons, the trial court believed that a no-damages-for-delay clause in the parties’ contract barred the subcontractor’s claim.
Continue Reading Court Concludes No-Damages-for-Delay Clause Did Not Bar Subcontractor’s Disruption Claim

Contractors and subcontractors that incur increased costs to complete their work due to delay or other impacts on a project sometimes have difficulty proving their damages. There are various ways to calculate those damages, but the surest way to have a claim rejected is by asserting a total cost claim.
Continue Reading Total Cost Claims—Frequently Rejected and Rarely Effective

After a general contractor on a federal government project allegedly terminated a subcontractor’s contract for convenience, the subcontractor sued the payment bond surety for the amounts owed to the subcontractor. In Maguire-O’Hara Construction, Inc. v. Cool Roofing Systems, Inc., the subcontractor claimed the surety was liable for the unpaid remaining balance on the subcontract of nearly $2.6 million, even though the subcontractor was only owed about $360,000 for completed work. The surety filed a motion for judgment on the pleadings seeking dismissal of the subcontractor’s $2.6 million claim, which asked the court to determine whether the subcontractor could assert a claim against the surety for unperformed work. The court’s answer? No way.
Continue Reading Federal Court Rejects Subcontractor’s Payment Bond Claim for Unperformed Work

(This post was included in the Florida Transportation Builders’ Association weekly newsletter.)

As contractors work through the coronavirus (COVID-19) pandemic, many contractors have been impacted in their ability to timely and efficiently complete projects. COVID-19 impacts to a project may result in increased completion costs, including labor inefficiencies, increased equipment costs, and additional material costs. A contractor may attempt to seek those increased costs from the project owner, a subcontractor, or an insurer.Continue Reading The Importance of Documenting and Tracking Coronavirus Impacts to Construction Projects