Miller Act Bond Principals Intervening in Lawsuits
It is not uncommon in any bond lawsuit for a subcontractor, sub-subcontractor, or suppler to sue the relative surety and leave out the prime contractor/ principal on the bond. However, it is important to keep in mind that prime contractors also may, on occasion, move to intervene in bond lawsuits as the principal of the payment bond at issue. This may be especially important in Miller Act payment bond lawsuits on Federal lawsuits. Often times, the principal in such bond claims intervenes in order to assert a counterclaim against the claimant, or alternatively, assert a third-party claim. These affirmative claims, as opposed to defenses which generally may be asserted by a surety, belong to the prime/principal contractor and not its surety.
Federal courts typically allow the principal to permissively intervene in the lawsuit given its relationship to the bond at issue, especially if the contractor plans to assert an affirmative claim to assist in effecting the resolution and disposition of all claims. Although the right to intervene is not absolute, the prime contractor has a stronger basis to intervene in the lawsuit as a principal of the payment bond if the principal has critical affirmative claims or if the surety happens to be represented by different counsel. Depending on the facts of the claim, it is an important consideration to make for a principal whether or not it wants to attempt to get involved in the underlying lawsuit.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.