News

In a recent matter in the U.S. District Court for the District of Maryland, a subcontractor initiated a suit against a general contractor and its payment bond surety to recover for claims of changed work and increased costs on a construction project. MBR Constr. Servs., Inc. v. Liberty Mut. Ins. Co., No. GJH-15-14, 2016 WL 727107.  The general contractor and payment bond surety filed a motion to dismiss, or in the alternative stay, the subcontractor’s action pending the completion of mandatory dispute resolution procedures between the general contractor and the owner of the project. The Court found that the subcontractor’s failure to satisfy a contractually binding “condition precedent to the initiation of . . . the instant litigation” was cause to stay the action pending resolution “of the contractual dispute resolution procedures” between the general contractor and the owner of the project. The Court held that the parties were bound to contractual procedures they agreed to in the subcontract, which required the subcontractor to allow the general contractor to exhaust the contractual remedies under the Prime Contract before the subcontractor could proceed directly against the general contractor.