Payment Bond Coverage
"In U.S. for the use of Capital Computer Group, LLC v. The Gray Insurance Co., Case No. 10-15519 (11th Cir. December 21, 2011) the claimant alleged that it was an unpaid first tier subcontractor on a Miller Act project. The prime contractor had approached another contractor (Code 4 Systems, Inc.) about the work, but Code 4 could not qualify for financing. Code 4 and the claimant then arranged for the claimant to enter into the “subcontract” and sub-subcontract the work to Code 4. The claimant financed the work via a factoring arrangement. The work had been performed and the prime contractor had not paid for it, but the surety argued that the claimant was simply providing financing and thus was not within the coverage of the Miller Act payment bond. The Court looked to the subcontract, which obligated the claimant to perform the work including maintaining insurance for the prime contractor’s benefit and indemnifying the prime contractor. The fact that the claimant “performed” by hiring Code 4 to do the actual work did not make it any less of a subcontractor. The Court looked to the written documents and concluded that the claimant was a subcontractor within the coverage of the bond. The Court affirmed summary judgment for the claimant." RPPTL Subcommittee Surety Report.
Trenton H. Cotney
Board Certified in Construction Law
Board Certified in Construction Law
Trent Cotney, P.A.
1207 N Franklin St, Ste 222
Tampa, FL 33602
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