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The Surety company holding a bond hired a law firm to file an Interpleader Complaint.

California

Anonymous General Contractor

We are one of multiple claimants. What are our options to get our money from the bond?

6 replies

Peter Ryan

Construction Lawyer

Legal Guard Lawyer

Partner at Flores Ryan, LLP

| 280 reviews

Apr 14, 2020

Assuming that you have already have made a claim on the bond and that the claim is in dispute, you will have to file a laws suit to enforce your claim rights, including your rights to the bond. If you are named in the existing action, this can simply be a cross-complaint. If not, you may need to file a separate action. Most likely the actions will be consolidated or at least related.

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Anonymous General Contractor

Question Author

Apr 14, 2020

Is a bond only a life time lump sum, e.g. once enough claims have been made and exceed the bonds value the insurance carrier can then dump the value of the bond with a court and wash its hands of the claims?

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Peter Ryan

Construction Lawyer

Legal Guard Lawyer

Partner at Flores Ryan, LLP

| 280 reviews

Apr 14, 2020

Once the value of the bond is depleted, that is correct that the surety will have no more liability. But you can still go after the underlying party for amounts owed. That is why you would include the bond company and the underlying party in any legal action. But the purpose of the bond is to ensure that money is there should you prevail on your claim. Any further judgment amount will be more difficult to collect and could be wiped out by a bankruptcy.

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Cathleen Curl

Construction Lawyer

Attorney at The Law Office Of Cathleen M. Curl

| 135 reviews

Apr 14, 2020

You don’t need to file a separate lawsuit if the bonding company has already filed an interpleader action and you are named as a defendant in that action. You just need to file a timely answer to the interpleader action with the Court. I recommend that you hire an attorney to do this for you. Then you wait to see who else answers the interpleader action to know how many people are continuing to make a claim against the bond. Many people don’t bother to respond. The fewer people respond, the more money there is to share. Most of these cases settle without going to trial by the various claimants agreeing to accept their pro rata distribution of the funds, after the bonding company deducts their fees and costs. I advise you to call the attorney who name is at the top of the interpleader complaint and let them know you do intend to participate and are still making a claim against the bond, and then contact your own attorney.

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May 7, 2020

Is there any risk in participating and what should be included in the answer to court so our claim can be properly considered? Thanks.

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Linda Morton

Jun 19, 2021

Is there any risk in participating in the claim for money owed us by the bond holder? Also, would you expect there to be more required by the court than the unpaid invoice and supporting documents for our claim can be properly considered? The amount owed us and number of claimants make hiring an attorney not practical, but we would like to recover whatever we can from our loss.

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