Construction Payment and Performance Bond Bad Faith Litigation: Bringing or Defending Claims Amid Differing State Standards

Description

While fundamental differences between suretyship and insurance may support an argument against bad faith tort claims against construction payment and performance bond sureties, not all courts are receptive to this line of reasoning and the law is by no means certain and settled. Some states allow extra-contractual claims under common law or statutory law (or both) while others do not.

There is little case law regarding bad faith claims for performance bonds under the Miller Act or state counterparts, although some case law in the context of payment bonds suggests that these acts do not provide exclusive remedies, so the door is open to argue in favor of bad faith claims against sureties.

Whether representing construction project owners or sureties, counsel must understand the theories and arguments courts have accepted, or rejected, in assessing bad faith claims against bond sureties, and what conduct courts have considered in supporting a finding of bad faith.

Listen as our authoritative panel of construction and insurance counsel discusses bad faith liability theories applicable to construction performance and payment bond sureties, and what theories and arguments have been accepted and rejected by courts on both sides of the issue. The panel will provide perspectives of both construction owners bringing bad faith claims and sureties defending these claims.