THE LAW AND CIVIL ENGINEERING – JUNE 2017 NEWSLETTER
The Importance of Following All the Rules To Enforce Statutory Remedies
by Eugene Bass
A particular characteristic of the statutorily created legal remedies is that they can require a precise series of steps that must be taken for enforcement A “dotting of the I’s and crossing of the t’s” is definitely the rule. The concept behind the rigid application of “follow the rules” is that the remedies were created by stature and are in addition to the normal applicable remedies. If one does not comply with all the requirements of the statutory remedy, usually all is not lost, hence more rigid adherence can be justified.
There can be situations, however, where the statutory remedies can be all that is left. For example, where the non-paying party goes bankrupt, all hope of payment can be wiped out. If there is a mechanic’s lien, stop notice or payment bond right, the day can be saved and payment can be received provided the claimant has complied all the requirements for enforcement.
A paving subcontractor was not paid for improvements constructed as part of a subdivision. Both the general contractor and the developer went bankrupt. There was a payment bond, however, applicable to the “public works” of improvement including the streets that were required to be installed and paid for by the developer as part of the subdivision approval.
The paving subcontractor filed a lawsuit against the payment bond. The trial court ruled against the subcontractor, however, and the case was appealed. The appellate court agreed with the trial court’s decision and the paving subcontractor was denied any legal remedy to collect against the bond on its unpaid contract.
The subcontractor was denied recovery because of its failure to comply with all the various notices and time limitations required to enforce a public works payment bond. A public works payment bond requires that a “20-day public work preliminary bond notice ” be served. The notice must be served by prescribed methods,and within stated time limits upon the general contractor and the bonding company and must contain specific information . The paving subcontractor did not serve a “20-day public work preliminary bond notice ” but rather served a “20 day preliminary notice” applicable to private works of improvement. That private notice did not require service on the bonding company. In addition, the subcontractor failed to comply with the various time limitations applicable to service of the bond notice and filing of the complaint associated with the public works payment bond. The subcontractor argued that service of the notice applicable to private works, substantially complied with the public works bond notice requirements. The appellate court disagreed
It was apparent that the paving subcontractor did not understand or appreciate the type of bond that was on the project. That misunderstanding resulted in the subcontractor not being paid for any of the contract work performed and, in addition, incurring the expense of the various filing fees, attorney fees and costs incurred with the trial court and appellate court proceedings. An expensive lesson.