For the second time in recent months a Virginia circuit court has dismissed a subcontractor's suit to enforce a mechanic's lien bond because the suit failed to include the principal on the bond as a party defendant to the claim. Back in December, I wrote about the Loudoun County Circuit Court's decision in In re ADS Construction, Inc. v. Bacon Construction Co. (see "General Contractor Must Be Named as a Party to a Subcontractor's Suit to Enforce a Mechanic's Lien Bond Posted By General Contractor". There, a court dismissed a subcontractor's suit to enforce a lien bond issued by the general contractor for failing to join the general contractor as a defendant to the claim. Last month, the Circuit Court of Fairfax County reached the same conclusion on very similar facts in the case of Johnson Controls, Inc. v. Norair Engineering Corp.
Johnson Controls, a sub-subcontractor to Norair, filed a mechanic's lien claiming Norair had not paid Johnson Controls for fan coil units and related equipment. Norair petitioned the court to substitute a bond for the lien. The court granted the motion and Norair filed a bond with the court naming Travelers Casualty and Surety Company of America as surety and Norair as principal.
Subsequently, Johnson Controls filed suit against Norair for breach of contract and related claims and a separate claim in the same suit against only Travelers to enforce the lien bond. Travelers moved to dismiss the lien bond enforcement claim arguing that Norair was a "necessary party" to the lien bond enforcement claim and that Johnson Controls had failed to join Norair as a defendant to the claim. After discussing the applicable law, including a reference to the Loudoun County decision, the court agreed with Travelers and dismissed the claim to enforce the lien bond for failure to join a necessary party defendant - the bond principal - to the claim.
Johnson Controls then asked the court for permission to amend its suit to add Norair as a party to the lien bond claim. Just as in the ADS Construction case, however, the time limitation for bringing suit on the lien bond had expired. It was therefore too late to amend the suit to add Norair to the suit.
Claimants seeking to make claims on bonds, whether mechanic's lien bonds, payment or performance bonds, or other bonds, must be aware of time limitations and give careful consideration to the issue of naming necessary party defendants to their enforcement actions.