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Key Bills for Sureties Under Consideration in the States

Wednesday, April 2, 2014  
--P3s. In a newly enacted law, Indiana expanded the authority to use P3s for public facilities. In Kentucky, the House passed P3 legislation and it was fast tracked through the Senate last week. The bill that was sent to the Governor’s desk did not have the amendments that SFAA and AIA sought regarding bonding on local government P3s as many other stakeholders did not anything that would slow down or jeopardize the bill’s enactment. The Georgia P3 bill failed to pass before the legislature adjourned, and a new bill has been introduced in Missouri to authorize P3s for social infrastructure.

--Surety Bad Faith. After a year’s hiatus, the surety bad faith bill is back in Rhode Island, and this year’s version would allow any obligee, principal or claimant that is under any fiduciary bond to file a claim against the surety on the bond for wrongfully, and in bad faith, refusing to pay or settle a claim. The bill would allow the claimant to seek both compensatory and punitive damages, as well as reasonable attorneys' fees and costs of the suit.

--Bond Thresholds/Waivers. In Virginia, a $300,000 bond threshold has been enacted for the Town of Christianburg. The state bond threshold is $500,000. SFAA has received a report from AIA state counsel that some contractors now are opposing the increase in the Oklahoma state bond threshold from $50,000 to $150,000, making it likely that this bill will be defeated again this year.

In Florida, legislation has passed the Senate that would repeal provisions permitting the Orlando-Orange County Expressway Authority to waive bonds in under $500,000. Instead, the bill provides that the Authority shall encourage the inclusion of local-, small-, minority-, and women-owned businesses in its procurement and contracting opportunities.

--Recovery Fund. The conference report in Mississippi does not contain either the repeal of the $20,000 real estate appraisal management company license bond or the recovery fund considered under the Senate legislation to replace it. The conference report is identical to the House version of the bill, which revises the authority of the Real Estate Appraiser Board with no impact on bonding.

--Statutes of Limitation. Legislation remains in committee in Connecticut that would overrule the state supreme court’s ruling in Connecticut vs. Lombardo Brothers in which the court permitted the State to sue for alleged design and construction defects 12 years after the construction project had been completed, by which time the statute of limitations and repose had expired. The committee has until tomorrow to report out bills and we will keep our members updated on the status of this nullum tempus bill. We have received a report that a ten-year statute of limitation may be considered as an alternative to the pending legislation.

A bill in Kentucky that would reduce the statute of limitations for actions on a written contract from 15 to 10 years has passed the House. Sureties on bonds involving either court proceeding or a decedent’s estate would be exempted as existing law contains a seven and five year statute of limitations, respectively.

--Surety Eligibility. Legislation has passed the House in Illinois that would require that the surety on the bond of a public works project be licensed by the Illinois Insurance Department and having at least an A- rating from Best’s.

--Individual Sureties Legislation in the Maryland Senate to extend the existing individual surety law for five more years remains in committee. The clock is ticking as the projected adjournment date is April 7.

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