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Fidelity & Surety Law

Sloan Construction Co. v. Southco Grassing, Inc., 377 S.C. 108, 659 S.E.2d 158 (2008).
Opinion No. 26462, decided March 24, 2008.

A subcontractor on a state highway project sued the South Carolina Department of Transportation for negligence and breach of contract, alleging that the department failed to ensure that the general contractor was properly bonded as required by state law. The trial court granted the department’s motion to dismiss on the grounds that the Tort Claims Act prohibits subcontractors from bringing negligence claims against government entities for failing to enforce a statute and that the parties were not in contractual privity. However, the South Carolina Supreme Court reversed, finding that the department had a duty under the Subcontractors’ and Suppliers’ Payment Protection Act, S.C. Code Ann. §§ 29-6-210 et seq., to ensure that the appropriate payment bonds were issued in proper form and that the statute created a private right of action by subcontractors to vindicate their rights under the statute whether or not they were in contractual privity with the responsible government agency.

International Fidelity Ins. Co. v. China Const. America (SC) Inc., 375 S.C. 175, 650 S.E.2d 677 (Ct. App. 2007).
Opinion No. 4288, decided August 21, 2007.

A contractor sued a subcontractor and its surety for damages caused by the subcontractor’s breach of contract. On the day of trial, the subcontractor failed to appear and the contractor consented to the surety’s dismissal from the case. Upon conclusion of the trial against the subcontractor, the trial court awarded the contractor over $650,000 in damages. The contractor then sought and was granted summary judgment against the surety for the full amount of the judgment against the subcontractor. On appeal, the South Carolina Court of Appeals upheld summary judgment for the contractor because in South Carolina a judgment against a principal is binding and conclusive on the surety absent fraud or collusion or lack of jurisdiction. The court also held that the contractor was not estopped to enforce the judgment against the surety simply because it consented to the dismissal of the surety at trial.

 

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