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Claim Time-Barred for ‘Necessary Party’

A subcontractor who sued the general contractor for failure to pay and the surety on the general contractor’s bond should name the general contractor as a necessary party to the suit on the bond, but the surety’s demurrer is sustained because the sub is time-barred from amending its complaint to add the general contractor as a party to the suit on the bond, says the Loudoun County Circuit Court.

General contractor Bacon Construction hired subcontractor ADS Construction Inc. for a project on a commercial property leased by H&M Hennes & Mauritz LP. A dispute arose between Bacon and ADS over Bacon’s failure to pay ADS. On Feb. 8, 2012, ADS filed a memorandum of mechanic’s lien. On April 12, 2012, Bacon filed a petition to bond mechanic’s lien and a decree bonding lien was entered by this court. The surety of the bond that secures any obligation of Bacon to ADS with respect to the mechanic’s lien is Westfield Insurance.

ADS has sued Bacon and Westfield and the carrier has demurred.

The issue raised by the carrier’s demurrer is whether Bacon Construction, as the general contractor who is the principal under the bond, is a necessary party to the suit on the bond.
The applicable statute, Va. Code § 43-71, provides in relevant part that the sureties on any such bond, which may be involved in any suit or action brought under the statute, shall be made parties to such suit. The statute does not address whether the principal under the bond is also a necessary party. Although ADS Construction argues the statute should be construed to find the bond principal is not required to be named in a suit on the bond, the court believes the statute does not limit the necessary parties to a suit on the bond to the surety.

In this case, the release of lien bond provides that Bacon as principal and Westfield as surety are held and firmly bound unto ADS. Because the bond does not absolve Bacon from liability to ADS, Bacon retains an immediate interest in resisting the demand made in the suit on bond. Accordingly, Bacon is a necessary party to ADS’ suit on bond.

Westfield argues the statute of limitations has expired for ADS to add Bacon as a party to ADS’ suit on the bond. Pursuant to Va. Code § 43-17, ADS was required to commence its action to enforce its lien within six months from the time the lien was recorded. ADS asks for leave to amend its complaint to add Bacon as a party to ADS’ suit on bond. In this case, ADS recorded its lien on Feb. 8, 2012. Because more than six months have passed since this time, ADS is time-barred from amending its complaint to add Bacon as a part to ADS’ suit on bond.

The court will sustain Westfield’s demurrer with prejudice.

ADS Construction Inc. v. Bacon Construction Co. (McCahill) No. CL 74720, Oct. 18, 2012; Loudoun County Cir.Ct.; Seth A. Robbins, Robert K. Richardson for the parties. VLW 012-8-173, 4 pp.

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