Great American Insurance Company of New York v. Williamson County, Texas
Texas Court of Appeals, 3rd District (Austin) | 2025
What This Case Means for Subcontractors
A Texas appeals court ruled that a performance bond remains part of a public works contract even after the contractor is terminated, as long as the surety still has obligations. The county had one year from when the bond's obligations fully ended—not from when the contractor was fired—to sue the surety. This means sureties cannot escape liability by arguing the contract ended just because the contractor was removed from the job.
Key Takeaways
- •Performance bonds stay active beyond contractor termination. The one-year lawsuit deadline doesn't start until the surety's obligations completely end, not when the contractor is fired.
- •Bonds incorporated by reference into contracts are enforceable. Make sure your subcontract clearly states which bonds and documents are included so there's no dispute later.
- •Document when bond obligations actually end. Keep records of final inspections, punch-list completion, and warranty periods to establish when the surety's duties truly cease.
Bond was expressly included as part of the Contract.
Frequently Asked Question
When does the one-year deadline to sue a surety on a performance bond actually start?
The deadline starts when the surety's obligations completely end—not when the contractor is fired or removed from the job. This means even if a contractor is terminated early, the owner may still have time to sue the surety if the bond remains active for warranty work, final inspections, or other obligations.
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