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).
FEDERAL CONTRACT TERMINATION OR MODIFICATION
The White House has directed Agency heads to “terminate or modify . . . covered contracts.” With some exceptions, there are […]
Roads & Bridges | Maximizing Damage Recovery
MAXIMIZING DAMAGE RECOVERY
Tracking Costs, Avoiding Duplication in Liquidated and Actual Damage Claims
A County and Contractor contracted for construction of a road and […]
Roads & Bridges | Roadwork, Delays and Disputes
ROADWORK, DELAYS, AND DISPUTES
The Subcontract Case In Pecos County, Texas
“Road construction is ubiquitous in our society. . . .” C&C Road […]
Roads & Bridges | Understanding Sovereign Immunity
UNDERSTANDING SOVEREIGN IMMUNITY| Public Contracts and Lessons from Recent Texas Cases
Generally, governmental entities are immune from lawsuits. One exception is contractual. If […]
Roads & Bridges | Indiana Court Upholds Broad ND4D Clause
INDIANA COURT UPHOLDS BROAD ND4D CLAUSE | Ruling Precludes Subcontractor Claims for Delay and Acceleration Damages
This is the story of an Indiana […]
Roads & Bridges | Some Conditions Apply
SOME CONDITIONS APPLY | The scope of insurance policy coverage and what the terms dictate
At some time or another, many have tried […]
Roads & Bridges | Contract Termination
CONTRACT TERMINATION | An unpredictable case teaches hard lessons to each party involved
Court decisions are “opinions.” There are majority and dissenting (disagreeing) […]
Roads & Bridges | Good Faith and Fair Dealing
GOOD FAITH AND FAIR DEALING | How Do You Prove a Party Has Failed to Act Based Upon an Ulterior Motive?
The duty […]
Roads & Bridges | Not Another Notice Story
NOT ANOTHER NOTICE STORY| This Defensive Argument Seems to be on the Rise
AS I CONSIDERED the subject matter for this column, I […]
