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Unpaid Subcontractor Wins Right To Pursue Claim Against Govt

Wednesday, June 04, 2008 03:00 pm

Unpaid Subcontractor Wins Right To Pursue Claim Against Govt

A subcontractor in search of payment went after the project owner, a government entity. When both a trial and an appeals court dismissed its claims for violation of bond statutes, the subcontractor found its third try, this time with a state Supreme Court, to be a charm.

In 2001, Southco Grassing, Inc. (Southco) subcontracted with Sloan Construction Company (Sloan) to perform asphalt paving work, valued at approximately $52,000, on a South Carolina Department of Transportation (SCDOT) highway maintenance project. When Southco's payment bond issuer, Amwest Surety Insurance Company, went belly up, the bond was cancelled. Southco never responded to SCDOT's request that it provide proof of a replacement bond and, in 2003, informed SCDOT that it had made all payments on the project. In fact, Sloan had not received full payment, and the subcontractor brought action against SCDOT for failing to ensure Southco was properly bonded.

The lower courts found that Sloan could not bring a private right of action against a government entity for noncompliance with bond statues. The Supreme Court of South Carolina disagreed. The key to its finding lay in South Carolina legislation enacted in 2000: the Subcontractors' and Suppliers' Payment Protection Act (SPPA), S.C. Code Ann. 29-6-210 et. seq. (Supp. 2006). The u [...]

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