Moore Bros. Construction Co. v. Brown & Root, Inc.
962 F. Supp. 838 | District Court, E.D. Virginia | 1997
What This Case Means for Subcontractors
Moore Bros. Construction and Lane Construction sued their general contractor Brown & Root and surety Highlands Insurance for unpaid work on the Dulles Toll Road Extension. The court ruled that a surety company cannot hide behind a 'pay-when-paid' clause unless that clause is explicitly written into the payment bond itself. Subcontractors must be paid for completed work even if the general contractor hasn't been paid by the owner.
Key Takeaways
- •Always review the payment bond language directly—don't assume the surety can use defenses from the general contractor's subcontract with you
- •A 'pay-when-paid' clause in your subcontract with the GC does not automatically bind the surety; the surety's bond is a separate contract
- •If the payment bond doesn't explicitly mention 'pay-when-paid,' you can sue the surety for full payment within 90 days of completing your work, regardless of whether the GC was paid by the owner
The surety must explicitly include within the language of its bond any claim to the defenses of the prime.
Frequently Asked Question
Can a surety company refuse to pay me using the 'pay-when-paid' clause from my subcontract with the general contractor?
No. The surety's payment bond is a separate contract from your subcontract with the GC. The surety can only use a 'pay-when-paid' defense if that exact language appears in the bond itself. If it doesn't, you can sue the surety directly for payment within 90 days of completing your work, regardless of whether the GC was paid by the owner.
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