By: Beth N. Mercier, Esq.
Making a statutory payment bond claim pursuant to Connecticut General Statutes section 49-42 is an inexpensive and effective way to get paid on a public construction project in the State of Connecticut. Unfortunately, many contractors fail to make their claims within the required time limits or in the proper manner.
First, determine whether the public works project has a payment bond. Connecticut law requires public works projects valued at more than $100,000 to require general contractors to furnish a payment bond from a surety company. Get a copy of the bond from the Owner.
Second, determine whether you can file a claim. Contractors who have furnished labor or materials to either the general contractor or a subcontractor of the general contractor can file a claim against the payment bond.
Third, pay strict attention to the notice requirements or your claim will fail. Pursuant to section 49-42, a claimant has 180 days from the date when he last performed work or supplied materials, (or for retainage, 180 days from payment date in ⸹49-41a), to serve notice of a claim, by registered or certified mail, upon the surety, with a copy to the contractor named as principal on the bond. Warranty work, repair work and work to correct defects cannot be used to extend the 180 day time period for notice.
The notice must contain the following information: The amount of the claim, with substantial accuracy; the parties to whom or for whom labor or materials were supplied; and a detailed description of the project on which the labor and/or materials were supplied.
Upon receipt of the notice, the surety will usually request copies of the contract, correspondence regarding the claim, billing information and a notarized proof of claim. The contractor should quickly provide all backup documentation and the executed proof of claim to the surety for review. [**But take care to provide accurate information since the proof of claim form requires a notarized statement.]
Within 90 days of the service of the claim, the Surety is required to either make payment and satisfy the claim, or any portion of the claim which is not subject to a good faith dispute, or serve a notice on the claimant denying liability for any unpaid portion of the claim. Section 49-42 has penalties to the surety if it fails to discharge its obligation in responding to claims within 90 days; the statute provides that in that case, the surety “shall indemnify the claimant for the reasonable attorney’s fees and costs the claimant incurs thereafter to recover any sums found due and owing to the claimant.”
As you can see, ⸹49-42 provides that contractors receive a quick response to their claims because if the surety fails to respond within 90 days, the contractor will be able to claim attorney’s fees and costs in a subsequent lawsuit. Keep in mind that if the surety denies the claim, a claimant has one year from the date when he last performed work or supplied materials, or from when payment was due per ⸹49-41a, in which to file suit under the bond.
If you have any questions regarding payment bond claims, please call MKRB at 860-522-1243.
Michelson, Kane, P.C.
