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I. Coverage

A. Construction or repair contracts over $500,000 for any public construction contract by any state, city, county or governmental authority

1. Public body or entity may require bond on contracts under $500,000

2. Road or transportation projects require a bond if over $250,000

3. Construction means building, altering, repairing, improving or demolishing any structure, building, and any draining, dredging, excavation or grading on real property (not related to transportation projects)

4. Not applicable to any Virginia town with a population of less than 3,500 but they are known to comply

B. Actually, is two bonds, payment and performance

C. For subcontract over $500,000 subcontractor may be required by prime to furnish payment bond only

1. If prime does not require, material suppliers and laborers can recover on prime's bond

2. If prime requires subcontractor bond, material suppliers and laborers can join both bonds in suit, although subcontractor bond will be primarily responsible

II. Parties Protected

A. Similar to Federal Miller Act

1. Claimants who have a contract with the prime contractor

2. Claimants who have a contract with a subcontractor to the prime

B. Third-tier claimant, such as a supplier to supplier is not covered

III. Notice Requirements

A. Similar to Federal Miller Act with a party not directly contracting with prime having 90 days to provide notice to prime of last furnishing labor or material

1. Sub or supplier to subcontractor of prime is not required to provide notice for retainage claim

2. Last work/supply problems may be more liberal than Miller Act but it is unwise to rely on corrective/remedial work as trigger for "last day"

3. Unlike Miller Act notice must be by registered or certified mail to a business office of prime contractor

B. One year deadline to file suit (from last date of furnishing labor or material)

C. Cannot file suit within 90 days of last furnishing labor or material (will be premature and subject to dismissal)

IV. Enforcement of Bond Claims

A. Suit must be brought within one year of last date work or material furnished

1. Suit can be brought in Circuit Court or General District Court, depending on amount of claim

a. Principal amount not exceeding $4,500 has to be brought in General District Court

b. Principal amount over $4,500 and under $15,000 can be brought in either General District Court or Circuit Court

c. Principal amount of $15,000 or more can only be brought in Circuit Court

2. One year limitation is absolute, cannot be extended by contract between the parties

B. Suit is brought in city or county where project is located

C. Suit is civil action governed by normal Virginia civil procedure, including right of jury trial in Circuit Court

1. Surety can be joined in its own name-always enhances liability

2. Standard of proof is materials or labor furnished in good faith belief that they will be used on project-no need to prove actual use- Solite Masonry case (1977)

D. Attorneys fees not specifically covered or judicially decided

1. 4th Circuit allows supplier and subcontractor attorney's fees if in contract with their immediate contractor on Miller Act cases

2. 4th Circuit is likewise for service charges and specified interest rate of interest

3. Argument for coverage of attorney's fees, service charges and specified interest would parallel language in Miller Act


© 2015 Eugene W. Shannon, PLC



Eugene W. Shannon, PLC
ATTORNEY AT LAW

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426 East Freemason Street
Norfolk, Virginia 23510

Phone: 757-625-1771
 
Fax: 757-622-1703

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