ILNews

Court answers question on subcontractors' ability to recover

Michael W. Hoskins
January 1, 2007
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The Indiana Supreme Court today delved into the meaning of "subcontractor" and determined that performance bond coverage for third parties only goes so far.

Stemming from a certified question from the U.S. District Court for the Northern District of Indiana, justices considered: "Does a performance bond required by and issued in accordance with Ind. Code §8-23-9-9 afford coverage to a third-tier claimant?"

Chief Justice Randall T. Shepard wrote the opinion saying the statute does not afford that coverage, noting that a subcontractor is "any person or organization entering into a contract with a contractor to furnish labor and materials used in the actual construction of a state highway project."

Further in the decision, he wrote: "Accordingly, a claimant who does not share privity of contract with the contractor or a subcontractor is not entitled to the coverage of a performance bond issued under §8-23-9-9."

Justice Brent Dickson dissented without a separate opinion. The 4-1 decision came down in Alberici Constructors, Inc. v. Ohio Farmers Insurance Co. http://www.in.gov/judiciary/opinions/pdf/05220701rts.pdf, 94S00-0612-CQ-488, which involved a federal contract dispute relating to an Indiana Department of Transportation bridge project near Bluffton.

Contractor Primco secured a performance bond with defendant Ohio Farmers Insurance Co. and later entered purchase agreements with three other companies for needed materials. The third, Hillsdale Fabricators or Alberici Constructors, delivered bridge pieces but was not paid by the second company, Gateway Bridge. The insurance company rejected a claim by Alberici, saying it was "too far removed to have standing." Alberici ultimately sued the insurance company in federal court, arguing that it could recover under the state's performance bond statute.

"Without a bright line defining where surety coverage extends, contractors would face an incalculable risk of liability for claims made by distantly remote suppliers or laborers on contracts made without contractor approval," the chief justice wrote, later adding that the statute doesn't extend coverage under a performance bond to any entity more remote than a second-tier laborer or material supplier.

However, he added that this holding doesn't mean parties working on state highway projects are left without any way to ensure payment. Advance payments or some other "financial understanding" could be reached, as well as additional contract arrangements to extend that coverage, the chief justice wrote. The General Assembly could also amend the statute, he wrote.
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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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