Sloan Construction Company, Inc. v. Southco Grassing, Inc.
395 S.C. 164
S.C.2011Background
- SCDOT contracted in 2000 with Southco Grassing for highway maintenance in Greenville, SC, with a performance bond and a payment bond issued by Amwest Insurance Company as surety, totaling 100% of the contract value.
- Sloan Construction entered into a subcontract with Southco on July 28, 2001, and performed all work; Amwest was later adjudged insolvent and its bonds were cancelled.
- A Nebraska court approved a distribution plan allocating about 40% of each claim to bond claimants; Amwest bond claims were curtailed by liquidation proceedings begun in 2001 and approved in 2009.
- Southco failed to replace the cancelled Amwest bond after being notified by SCDOT in July 2001; Sloan submitted its final bill on October 31, 2001, which Southco did not pay.
- Sloan notified SCDOT in 2002 of the payment failure; Southco’s principal Wanda Surrett claimed all payments were made in March 2003, while SCDOT later verified contract completion and dispersed final retainage to Southco.
- Sloan sued Southco, Surrett, SCDOT, and Greer State Bank; Amwest was not named as a defendant; the circuit court dismissed claims against SCDOT for lack of private right of action under SPPA, an outcome reversed on Sloan I remand for liability assessment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to maintain bond under SPPA | Sloan argues SPPA creates a continuing duty to maintain a valid bond and a private right against the government for failure to do so. | SCDOT contends there is no continuing duty to maintain the bond once issued. | No continuing duty to maintain bond by government entities. |
| Mitigation of damages | Sloan contends Sloan acted in a manner consistent with mitigating damages and should not be offset by reliance on Amwest liquidation. | SCDOT argues Sloan failed to mitigate by not pursuing Amwest claims to collect against the liquidator. | SCDOT did not meet its burden to show Sloan failed to mitigate; circuit court affirmed. |
Key Cases Cited
- Sloan Construction Co. v. Southco Grassing, Inc., 377 S.C. 108 (2008) (held SPPA creates a private right of action against a governmental entity for failure to ensure proper bonding; law of the case)
- Barnes & Sweeney Enters., Inc. v. City of Hazel Park, 169 Mich.App. 422 (1988) (no duty on city to maintain bond validity for subcontractors)
- Flori Corp. v. Yellow Rose Development & Construction, Inc., 911 P.2d 546 (Ariz.App.1995) (no duty on city to continuously ensure a viable bond)
- DeKalb County v. J & A Pipeline Co., 263 Ga. 645 (1993) (no continuing duty on governmental entity to maintain bond)
- Med. Clinic Bd. of the City of Birmingham-Crestwood v. E.E. Smelley, 408 So.2d 1203 (Ala.1981) (liability for failing to require a bond varies by statute)