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120-Day Notice Period Upheld on St Fin L 137 Payment Bond

Brer-Four Trans. Corp. v. Zurich American Ins. Co.
2010 WL 4676934 (2d Dep’t Nov 16, 2010)

Brer-Four had a sub-subcontract with Fleet. Fleet in turn had a subcontract with Schiavone which had posted a public work payment bond by Zurich pursuant to State Finance Law Sec 137.

It was undisputed that Brer-Four failed to provide the notice to Schiavone within 120 days of the last date Brer-Four provided labor to the project as required by SFL 137. In fact it appears that no notice was given at all.

Zurich filed a motion for summary judgment which was denied by the trial court. The trial court must have found a question of fact as to whether Fleet was a subcontractor to Schiavone.

On appeal the 2d Dept reversed holding that Fleet was a subcontractor as that term was defined in the prime contract. In addition the court found that Brer-Four’s contract was with Fleet and not Schiavone.

This case again demonstrates the necessity that sub-subcontractors on public works projects must comply with the notice period (and for that matter the suit period) stated in SFL 137. The courts will enforce the statute as written even if it yields a harsh result to a payment bond claimant who otherwise had a good and valid claim.

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