What Venue should I Sue the Payment Bond Surety?

Let’s say you have a claim against a payment bond: either an unconditional payment bond on a private project (per Florida Statute s. 713.23) or a public payment bond (per Florida Statute s. 255.05). Ok, now, in what venue do you file your action against the payment bond?

First, if the payment bond contains certain venue language, this venue language is probably not enforceable because payment bonds cannot restrict a bond claimant’s venue.

Second, you want to look at the underlying contract to see if there is a venue provision or forum selection provision. This is important because if you intend on suing the payment bond surety and bond-principal (or party you contracted with), you may want to sue in a venue consistent with the venue provision.

For example, if you are a subcontractor located in Broward County on a project in Palm Beach County but your contract with the general contractor contains a Dade County venue provision, you may want to sue in Dade County if you plan on suing both the payment bond surety and the general contractor.

Third, you may decide that you only want to sue the payment bond surety. In this case, there is authority that supports filing the lawsuit where the claimant resides. In the above example, the subcontractor may prefer to just sue the surety in Broward County where the subcontractor is located.

Now, certain contracts include in the venue provision or forum selection provision that the payment bond surety is either an intended third party beneficiary of this provision or claims against the payment bond surety must be brought in the same venue as that of the general contractor. Referring back to the above example, assume the venue provision contained this language. The subcontractor may choose to comply with the venue provision and sue in Dade County based on the venue provision or it may decide that it still wants to sue the payment bond in Broward County where it is located. The argument to try to get around this (among other arguments) may be that by including this contractual language, it is akin to the bond trying to restrict venue language and should be deemed unenforceable. On the other hand, when I draft venue provisions for contractors, I typically include this language to create the argument and position that the venue provision in the underlying contract governs claims against the contractor’s payment bond surety.

Venue is an important upfront consideration in any lawsuit, no different than claims against payment bonds.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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