Elec. Contractors, Inc. v. Ins. Co. of State of Penn.

Plaintiff entered into a subcontract with a general contractor to perform work on a public construction project. The general contractor provided a payment bond with Defendant, a surety on the project. Plaintiff later submitted to the general contractor a request for equitable adjustment to the subcontract to recoup additional costs allegedly incurred as a result of the general contractor’s deficient performance. When the general contractor did not respond to the claims, Plaintiff sent Defendant notice of its claim. Defendant failed either to pay or to deny notice of the claim within ninety days as required by Conn. Gen. Stat. 49-42(a). Plaintiff subsequently sued Defendant in federal district court, alleging that Defendant had waived any substantive defenses, and Plaintiff was therefore entitled to judgment in the full amount of the claim. The district court certified questions of law to the Supreme Court regarding the correct interpretation of section 49-42(a). The Supreme Court answered that a surety’s failure to pay or deny a claim under section 49-42(a) within the ninety day deadline is tantamount to a denial of the claim and does not constitute a waiver of the surety’s right to defend the claim on the merits. View "Elec. Contractors, Inc. v. Ins. Co. of State of Penn." on Justia Law