Q: We provided a Final Clean for a Large Dealership in Louisville KY. The GC has not paid in two months
We files a Demand Lrt, NOI and Mechanic Lien. They bonded off and we filed claim against the surety bond. Our bond was denied and I dont understand how it reads. The terms of the Bond define the obligations of the Surety. As such, the Bond states:
“…NOW, THEREFORE, if the above Principal [Kelley] shall pay any sum which the
claimant [Elements] may recover on the claim together with the costs of suit in the action
to enforce such claim of lien, if he recovers therein, then this obligation shall be void,
otherwise to remain in full force and effect.” (emphasis added) What does this mean It is the Surety’s understanding that Elements has not filed an action to enforce its claim of lien. Moreover,
review of Article 6 of the contract between Kelley and Elements (the “Subcontract”) provides that “[C]laims,
disputes, or other matters in controversy arising out of or related to this Subcontract…shall be subject to
mediation as a condition precedent to binding dispute resolution.
A: It appears to mean you have to go to mediation first, and then binding arbitration against the defaulting party prior to attempting to collect from the surety. In short, it looks like they are saying you have not exhausted all your remedies against the defaulting party prior to seeking compensation from the surety.
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