41 F.4th 956
8th Cir.2022Background:
- BCC hired Ben F. Blanton Construction (Blanton) to build apartments; Blanton obtained a $~25M payment bond from Fidelity & Deposit Co. of Maryland (F&D).
- The bond promised payment to subcontractors for labor and material and allowed unpaid claimants to "sue on this bond" for "such sum or sums as may be justly due."
- Two subcontractors (Stark Truss and Lindberg) prevailed in arbitration and were awarded amounts for labor/material plus substantial attorneys' fees, costs, and interest.
- Blanton filed bankruptcy; F&D tendered only the labor/material portions (and some interest) and refused to pay fees/costs, prompting Owners (assignee of Lindberg) and Stark Truss to sue.
- The district court granted F&D summary judgment; the Eighth Circuit reversed, holding the bond’s "sums as may be justly due" can include fees, costs, and interest recoverable under the subcontract and remanded for calculation and possible discovery.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "sums as may be justly due" includes attorneys' fees, costs, and interest | Owners/Stark: phrase covers all amounts recoverable under the subcontract, including fees/costs/interest | F&D: bond limited to labor and material (and limited interest) because the voiding clause mentions only labor/material | Court: phrase includes amounts recoverable under the subcontract; fees/costs/interest may be "justly due" and thus covered |
| Whether other bond language (voiding clause referencing labor/material or Connecticut clause) limits or expands F&D's obligation | Owners/Stark: the "has not been paid in full" clause and use of term-of-art "justly due," plus the Connecticut clause, indicate broader coverage | F&D: proximity of the labor/material language shows bond was meant only to secure payment for labor/material | Court: interpreted bond as a whole; the distinct language and the Connecticut-specific clause imply the surety intended coverage beyond mere labor/material; remanded to determine amounts |
Key Cases Cited
- F.D. Rich Co. v. U.S. ex rel. Indus. Lumber Co., 417 U.S. 116 (U.S. 1974) (discusses Miller Act bond language and remedial purpose)
- D&L Constr. Co. v. Triangle Elec. Supply Co., 332 F.2d 1009 (8th Cir. 1964) (held "sums justly due" may include interest and attorneys' fees if subcontract so provides)
- U.S. ex rel. Maddux Supply Co. v. St. Paul Fire & Marine Ins. Co., 86 F.3d 332 (4th Cir. 1996) (Miller Act cases permit recovery of fees/interest when underlying contract allows)
- Brooke Drywall of Columbia, Inc. v. Bldg. Constr. Enters., Inc., 361 S.W.3d 22 (Mo. Ct. App. 2011) (distinguished — involved different bond structure obligating contractor to perform prime contract)
- Frank Powell Lumber Co. v. Fed. Ins. Co., 817 S.W.2d 648 (Mo. Ct. App. 1991) (Missouri context on payment bonds and protection against subcontractor liens)