Leonard C. Carnaghi, Inc. v. Amwest Surety Ins. Co.
617 N.W.2d 49 | Michigan Court of Appeals | 2000
What This Case Means for Subcontractors
A subcontractor performed work and submitted completion documentation before a payment bond was issued by the surety. The subcontractor was never paid. The court ruled that payment bonds cover work performed before the bond's execution date, and that default occurs when payment is not made—not when work is completed. The case was remanded for trial, meaning the subcontractor has a viable claim against the surety even though the bond was issued after work began.
Key Takeaways
- •Payment bonds can cover work performed before the bond is issued—timing of bond execution doesn't eliminate coverage for prior labor and materials
- •Default is triggered by non-payment, not by project completion—document when you stop getting paid, not just when you finish work
- •Keep detailed records of work completion dates and payment requests; these dates matter more than bond issuance dates in determining coverage
Default occurs when subcontractor was not paid, not when work completed.
Frequently Asked Question
If a payment bond is issued after I've already done the work, can I still make a claim against it?
Yes. Michigan courts have ruled that payment bonds can cover labor and materials furnished before the bond's execution date. What matters is whether you were paid, not when the bond was issued. Document your work completion and payment requests carefully to support your claim.
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