Since Y2K, sureties for federal projects in Virginia have been unable to defend against bond lawsuits by asserting pay-if-paid or pay-when paid clauses. Now, sureties are also unable to rely upon no-damage-for-delay (ND4D) and owner-related disputes clauses.
Recently, the Federal District Court for the Eastern District of Virginia held that a Prime’s Surety could not use the ND4D clause to defend against a Sub’s Miller Act lawsuit. Neither was the Sub required to wait until resolution of delays that the Owner may have caused, despite an express subcontract provision requiring as much.
The Court held that “the subcontract cannot eliminate the right to payment altogether, or delay it, unless the subcontract does so in a manner consistent with the terms of the Miller Act.” The only consistent means of which this author knows, and which the Court endorsed, were interim payment waivers for work already performed. The Court likened ND4D clauses to prospective waivers, which the Court said are prohibited by the Miller Act (although no such language exists in the Act).
Roads& Bridges | Confusing Waters
CONFUSING WATERS | A Supreme Court ruling leaves room for ambiguity
What happens when there may be a “significant nexus” between “adjacent” and/or […]
Roads & Bridges | Authority Defined
AUTHORITY DEFINED | The Law of Agency is Important to Understand
For any project, this Russian proverb is helpful: Doveryay, no proveryay – […]
Jurisdiction is Power
Not bad power, but the ability of a decision-maker (e.g., court) to decide which side is right (or which is more correct). […]
Roads & Bridges | Defining Labor
DEFINING LABOR | How the Miller Act continues to shape the industry
In the late 1700s, risks of nonpayment caused a shortage of […]
Roads & Bridges | Mediation Melee
MEDIATION MELEE| An arbitration case can be costly
Arbitration can be a bridge over troubled waters. In this crossing, the parties argued over […]
Roads & Bridges | Written Notice
WRITTEN NOTICE | Beware that strict compliance of the contract might be required.
When an owner replaced a contractor for significant safety violations, […]
Roads & Bridges | Mommie Dearest
MOMMY DEAREST | The story of an ESA without a MOM
Nobody enters this world, or a contract, without a mother: There can […]
IIJA | Does Closing a “Giant Loophole” Cost Contractors?
A recent article published by Roads and Bridges magazine reports that the Office of Management and Budget is working to broaden the scope […]
Roads & Bridges | Buy American Plan Gets an Update
BUY AMERICAN PLAN GETS AN UPDATE
The Office of Management and Budget is developing standards to replace the current Buy […]

Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio
