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The Supreme Court of Canada announced Thursday it will hear an appeal from a subcontractor on an oilsands project who is trying to sue a general contractor for failing to inform it of the existence of a surety bond. Court records indicate that Langford Electric Ltd. was a subcontractor to Bird Construction Company, which required Langford to obtain a labour and material payment bond. Langford was issued a bond by the Guarantee Company of North America. Bird Construction was general contractor to Suncor Energy on a project near Fort McMurray, Alberta. A third contractor – Valard Construction Ltd. – was a subcontractor to Langford Electric. Valard was not fully paid for its services and tried to make a claim on the bond, but The Guarantee “denied the claim on the basis that Valard had not provided timely notice,” wrote Mr. Justice Gerald Verville, of the Alberta Court of Queen’s Bench, in a ruling released Feb. 27, 2015. Valard sued Bird, claiming that Bird “had a fiduciary duty” to inform Valard of the existence of the bond. The lawsuit was dismissed by the Alberta Court of Queen’s Bench. Valard was unsuccessful on appeal to the provincial appeal court, which issued a divided ruling last year. “Bird was not obliged to provide notice” to Valard of the existence of the bond, Justice Verville ruled. “In any event, a simple standard inquiry by Valard would be a more reliable means of obtaining the information. While it may be that employees of subcontractors may not always be aware of the possibility of a bond, this does not explain why a large and sophisticated entity such as Valard would not have in place a mandatory protocol under which bond information is requested on all subcontracts, especially given the state of the law on the issue. In this case, we are not dealing with the disadvantaged and infirm, but rather with a large sophisticated company with five or six hundred employees in Canada which has its own surety or bonding company.” Valard applied in October, 2016 for leave to appeal to the Supreme Court of Canada, which announced March 9, 2017 that leave to appeal is granted. Neither Langford nor The Guarantee are parties in the case. Valard was contracted by Langford to perform directional drilling between March and May, 2009. The following year, Valard filed a statement of claim against Langford and obtained a default judgment of $660,000.17. “On April 19, 2010, Valard made an inquiry of Bird as to whether there was a Bond,” Justice Verville wrote. “Bird responded in the affirmative and provided contact information” for The Guarantee. Valard then submitted a claim to The Guarantee in 2010, which The Guarantee denied because Valard failed to provide notice “within 120 days after the date upon which it performed the last of the work.” Valard sued The Guarantee and added Bird as a defendant and then discontinued its suit against The Guarantee. The bond uses a form issued by the Canadian Construction Documents Committee and is “explicit that the respondent obligee/trustee is not obliged to do or take any act, action or proceeding against the surety on behalf of the claimants to enforce the provisions of the bond,” wrote Madam Justice Frederica Schutz of the Alberta Court of Appeal. “The bond imposes no positive obligations of any other kind upon the respondent.” Concurring in that ruling, released Aug. 29, 2016, was Madam Justice Patricia Rowbotham. “Canadian courts have rejected the appellant’s proposition that the trustee/obligee under a labour and material payment bond has a positive legal duty to take steps to bring the existence of a labour and material payment bond to the attention of potential claimants,” Justice Schutz wrote on behalf of herself and Justic Rowbotham. Dissenting was Mr. Justice Thomas Wakeling. “The fundamental principle is that a trustee has a duty of loyalty,” Justice Wakeling wrote. “This includes the duty to undertake reasonable measures to make available to a sufficiently large segment of beneficiaries or potential beneficiaries information that announces the existence of the trust and the markers of a beneficiary if a beneficiary or potential beneficiary would derive a benefit from knowing that a trust existed and the criteria defining a beneficiary.” http://www.canadianunderwriter.ca/commercial-lines/supreme-court-canada-hear-appeal-subcontractor-arguing-trustee-must-notify-potential-claimants-existence-surety-bond-1004109956/

Workers who built the Southmost Hike and Bike Trail in Brownsville claim they haven’t been paid. Jorge Contla said he worked on the hike and bike trail project as a subcontractor for ARRCO General Construction Group. The city of Brownsville, though, provided documents to CBS 4 News showing Contla presented himself as a representative of ARRCO. Contla and other workers claim ARRCO hasn’t paid them in months. ARRCO didn’t respond to a request for comment Monday. “The city says ‘Yes, you are going to get paid’ but we haven’t seen any results,” Contla said. When ARRCO submitted a bid for the project, the company included standard paperwork for what’s called a performance bond. A performance bond is basically an insurance contract for the construction project. If ARRCO couldn’t complete the job, the insurance company would hire a new contractor to complete the work. ARRCO submitted records to the city showing a performance bond from a company called Texas Indemnity Contractor. CBS 4 News called the Texas Department of Insurance, which couldn’t find any record of a company called Texas Indemnity Contractor. In response to questions from CBS 4 News, the city of Brownsville released a statement about ARRCO and Contla: The city provided CBS 4 News a business card that identifies Contla as a project manager for ARRCO, a photo showing Contla wearing an ARRCO hard hat, and a sign-in sheet where Contla listed himself as a representative of ARRCO. Contla said he worked as a subcontractor for ARRCO; he flatly denied ever working directly for ARRCO. To document his claim, Contla provided a subcontractor agreement between a company called Ziur Corporation and ARRCO. Brownsville referred the matter to the Cameron County District Attorney’s Office for investigation. http://valleycentral.com/news/local/city-contractor-submitted-forged-bond-for-brownsville-construction-project

Once again, the University Estates development in northwest Athens is the subject of litigation, with a bonding company called Developers Surety & Indemnity filing a complaint against UE and its former developer Dr. Richard Conard, along with secretary Elizabeth Conard. During Conard’s time developing University Estates, the allotment off Ohio Rt. 682 and Armitage Road was the subject of multiple lawsuits either filed by Conard or against him. In 2009, Conard, who lives in Palmetto, Florida, filed suit against the city of Athens after officials signed a memorandum of understanding with another developer that had agreed to purchase a mortgage note on more than 600 acres of UE’s mixed-use development site. Eventually, that lawsuit was dismissed without prejudice in U.S. District Court. In 2010, Citizens Bank of Logan acquired the property after the bank said a default had occurred. In early 2014, H2 Development LLC, which is co-owned by local businessman Brent Hayes, purchased 566 acres of land that had not been platted for homes from Citizens Independent Bankcorp Inc. for slightly over $1.1 million. On Jan. 6, Developers Surety & Indemnity Co., of Irvine, California, filed its lawsuit against the Conards in Athens County Common Pleas Court, seeking $55,943. This amount, according to the lawsuit, was paid to the city of Athens as settlement of a claim the city made on the bond. The city did this in an effort to complete streets within the development. That work was completed in 2013 after a struggle with road issues since the land was annexed into the city in 2000. Athens had refused to accept the UE roads into the city until all of the roadways were completed to meet city standards. Eventually, an agreement was struck to assess UE property owners to pay for the road-improvement project, which cost $715,700. In addition to the $55,943 bond settlement, Developers Surety claims in the lawsuit that they have incurred “costs, expenses and attorneys fees” in the past and will continue to do so, requesting the court to award both the settlement and the other costs, as well as any other relief deemed just and appropriate. As of Friday, Conard had not filed an answer to the complaint. http://www.athensnews.com/news/local/lawsuit-filed-against-university-estates/article_85ce1780-db50-11e6-a898-cf62482b3c6a.html

EVANSVILLE, IN (WFIE) – Court documents show Peyronnin Construction filed for Chapter 7 bankruptcy on Monday. That means several multi-million dollar construction projects are in the lurch, including the McLean County Regional Water Treatment Plant, the International Blue Grass Museum, Owensboro Community and Technical College, and a gravity-fed sewer line in Mt. Vernon. Owensboro Community and Technical College – $12-million contract International Bluegrass Museum – $9.6-million contract McLean County water treatment plant – $8.5-million contract Mt. Vernon gravity-fed sewer line – $860,000 contract Owensboro city attorney Ed Ray says as of Tuesday morning construction on the museum was shut down and the project will be turned over to the surety company, The Great American Insurance Company. He says they will be responsible for finding a “new contractor at the contractor price.” Ray says the city gets a lot of pushback over using performance bonds for projects like this, but he says this is the perfect example of why they exist. The bond is like an insurance policy and it means Owensboro won’t be out any money now that the contractor hired to do the project has folded. Museum Project Director Ted Lolly says the news came as a “total surprise” because the company has been in business for at least 70 years. Lolly says construction of the museum is only 20 percent done, but he says the city has a surety bond for this type of situation. He says while Peyronnin’s bankruptcy will ultimately slow construction, the city will be okay financially. McLean County Judge Executive Kelly Thurman says the water plant project engineer called him Tuesday morning and told him about the bankruptcy filing. He says he was shocked by the news. Work on the plant has come to a halt and Judge Thurman expects crews to pack up and leave in the next few days. The bankruptcy isn’t going to impact the project getting done or add any extra cost because the county has a performance bond in place. A new contractor will be selected to finish the work. Judge Thurman says the water plant is almost finished. It was supposed to be completed this spring, but with the bankruptcy filing, Thurman expects the plant to be up and running this fall. http://m.wave3.com/wave/pm_/contentdetail.htm?contentguid=od:hdBWupfS