The Construction and Litigation Groups at Saalfeld Griggs PC recently obtained a favorable ruling from the Oregon Court of Appeals. The ruling imposed a judgment against a surety company for a substantial award in favor of our client. The judgment against the surety will allow collection of a judgment which, before the appeal, was entered only against a company that had no assets. Additionally, the Appellate Court allowed an award against the surety company reimbursing attorneys’ fees expended by our client during the appeal.
Our client was a subcontractor on a public works project. The general contractor failed to pay the subcontractor in full for work performed pursuant to the contract, change order work, force account work, and extended use of rental equipment. The trial judge refused the subcontractor’s claim for contract damages, but awarded a judgment against the general contractor for quantum meruit (implied contract) for the reasonable value of labor and materials provided by the subcontractor on the public works project. However, the trial court refused to require the surety company that issued a bond on the project to pay on the judgment.
The Court of Appeals reversed the trial court’s decision, adding the surety company to the judgment in favor of the subcontractor. Apparently, the trial court decided that the surety company did not have to pay for the subcontractor’s materials and labor unless the written agreement between the parties required payment. The Court of Appeals ruled that a claim under quantum meruit can require a surety issuing a bond on a public works project to pay for the reasonable value of labor and services provided by a subcontractor to the project. This is so, even if the subcontractor’s contract claim was not sustained at trial.
The appellate court noted that a claim against a surety that issued a bond on a public works project requires that the general contractor is liable for labor or materials provided by its subcontractor on a public works project. Whether the contractor is liable to the subcontractor for breach of any express contract or for the reasonable value of labor or services, pursuant to an implied contract, is not relevant.
The subcontractor was entitled to its attorneys’ fees incurred on appeal because claims under the Little Miller Act allow reimbursement of attorneys’ fees to successful bond claimants. This decision is not yet final, as the surety company has not requested review by the Oregon Supreme Court. Our team, however, remains hopeful that either the Supreme Court will refuse to take the appeal or that it will affirm the Court of Appeals’ decision requiring the surety company to pay on the bond it issued on the public works project.