Bonding Companies May Be Liable for Subcontractor’s Legal Fees

Kegler Brown Construction Newsletter

A case from California has held that a subcontractor may recover attorney's fees from a bonding company when the subcontract provided for an award of fees. T & R Painting v. St. Paul Fire & Marine Ins. (Cal. App. 2d Distr. Div. 2, March 22, 1994) 1994 WL 90001. Now that the model ASA/AGC subcontract provides for an award of attorney's fees to the prevailing party, subcontractors may be able to recover their attorney's fees against the bonding company even though the bond itself does not specifically provide that it covers attorney's fees.

Subcontractors and suppliers in Ohio may be able to make a similar argument that bonding companies are liable for 18% interest and attorney's fees under Ohio Prompt Payment Act in that these amounts constitute the "lawful claim" of the subcontractor or supplier for which the bonding company is liable under the terms of the bond.