G. Statute of Limitations for Sureties

• Library: SC Construction Law Desk Book (SCBar) (2013 Ed.)

G. Statute of Limitations for Sureties

1. Actions Against the Surety

a. General Principles

Many bonding companies include two year limitation periods within their bonds. Some construction contracts will also include one or two year limitation periods. S.C. Code Ann. § 15-3-140 provides that any provision in a contract that purports to shorten the prescribed time period for similar causes of action is ineffective. Under South Carolina case law, a provision in a contractor's bond that limited the time for filing claims was therefore ineffective, unless the shortened limitation is prescribed by South Carolina law.¹²⁷

b. Little Miller Acts

Under the Federal Miller Act, a claimant must file against the surety no earlier than 90 days and no later than one year after the date on which it last supplied labor or material to the public project. Claimants who have a direct contractual relationship with a subcontractor, but who do not have a direct contractual relationship with the general contractor (express or implied), must give notice of their claim to the general contractor in a manner that can be verified by a third party within 90 days of the last provision of labor or material. Failure to meet either of these deadlines is grounds for dismissal of the claim.¹²⁸

South Carolina has several Little Miller Acts in the form of different, but related statutory schemes that apply to public projects. Those statutes include: the Subcontractors' and Suppliers' Payment Protection Act, S.C. Code Ann. §§ 29-6-10 to -290.; the South Carolina Consolidated Procurement Code, S.C. Code Ann. §§ 11-35-10 to -5270; and statutes governing contracts with the Department of Transportation, S.C. Code Ann. §§ 57-5-10 to -1700. These Little Miller Acts are more thoroughly discussed in other chapters of this book.

c. Procurement Code

Under the South Carolina Consolidated Procurement Code, a person making a payment bond claim shall make said claims "within ninety days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material . . . upon which the claim is made . . . ."¹²⁹ The South Carolina Court of Appeals discussed this statute in Quality Lightning Protection, Inc. v. H.C. Brown Construction Co.¹³⁰

In Quality Lightning, Brown contracted with the South Carolina Department of Highways and Public Transportation ("SCDHPT") to build certain buildings in Kingstree, South Carolina. Brown subcontracted part of the work to Colonial Electrical Company, which in turn subcontracted part of its work to Quality Lightning Protection. Quality brought suit against Brown and its surety, USF&G, under a payment bond issued pursuant to S.C. Code Ann. § 11-35-3030(1) and (2) (c). On referral to a special referee, judgment was rendered in favor of Quality and Brown appealed.

The issue was whether Quality had given written notice to Brown within 90 days after it last performed labor or furnished or supplied material on the job it contracted to perform. The Court found that notice had been given within 90 days, but the inquiry related to whether the work performed within the 90-day requirement was "labor" under the terms of the statute.

Quality billed Colonial Electric on November 10, 1998, and the invoice indicated "Billing for 100%—Job Complete."¹³¹ Quality sent a worker back to the site on March 7, 1989 to correct deficiencies at the project that had been noted by Underwriters Laboratory...