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City Liable To Surety For Release Of Contract Funds Bonds-payment; Retainage

Tuesday, February 03, 2004 11:57 am

City Liable To Surety For Release Of Contract Funds Bonds-payment; Retainage

The U.S. Court of Appeals has held a municipality liable to a surety for releasing funds to a defaulted contractor despite the surety's request to withhold the funds pending an investigation of claims by unpaid subcontractors.

The City of Pine Bluff, Arkansas, awarded a contract to David Mitchell Construction to clean up ice storm damage. Mitchell furnished payment and performance bonds issued by Pennsylvania National Mutual Casualty Insurance Co.

As the work progressed, the City and Mitchell started arguing over Mitchell's alleged hauling of debris which was not eligible f [...]

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