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Ohio appeals court trims Hudson Insurance payment bond liability
The ruling kept Hudson liable on two road projects but vacated liability on a third after a supplier missed a notice-of-furnishing step required by Ohio statute.
An Ohio appeals court reduced a surety bond bill against Hudson Insurance Company, finding the insurer stayed liable as surety on two road projects but not on a third.
According to Insurance Business, the dispute involved The Shelly Company, a materials supplier that sued to collect unpaid invoices for asphalt supplied to roadway jobs. Shelly had contracted with paving contractor Perk Company for multiple projects, then pursued Hudson because Hudson had issued payment bonds covering some of the work.
The court upheld Hudson’s liability for the Union Avenue and U.S. 322 jobs, concluding Shelly had direct contract privity with Perk as the principal contractor, which meant it did not need to file a notice of furnishing to preserve its bond claim.
For the Auburn project, the appeals court ruled Shelly failed to show Perk agreed to take over a contract from N.E.S. Corp, so Shelly had to serve a notice of furnishing on Perk as principal contractor and did not. The court called that missed notice fatal to any claim against Hudson for Auburn, vacated the related liability, and remanded for damages to be recalculated, while also sending other awards including unjust enrichment, certain personal asset findings, and attorney fees back for further proceedings.