A Virginia court recently determined that a subcontractor’s bond claim that named the surety, but not the principal, was improper. After a subcontractor provided equipment and materials to a general contractor on a construction project, a dispute arose over payment. The subcontractor filed a mechanic’s lien which was then bonded off by the general contractor. The subcontractor then commenced litigation against the surety on the bond.
Following a motion to dismiss filed by the surety, the Circuit Court determined that the bond’s principal, the general contractor, was a necessary party to the bond claim. The Court also held that the subcontractor could not amend its complaint because the applicable limitations period had expired and mechanic’s lien claims were not covered by Virginia’s relation back statute. The court dismissed the subcontractor’s bond claim with prejudice. Johnson Controls, Inc. v. Norair Eng’g Corp., No. CL-2012-0006504 (Va. Cir. Ct. Jan. 10, 2013).
As a result of this decision, contractors should be mindful to include the proper parties to any action on a bond.