Annual Survey of Fidelity and Surety Law, 1990 - Part II

Procedural issues that have been addressed in Miller Act bond cases include: 1. the waiver of a claimant's right to arbitrate because of active participation in litigation, 2. the right of a facilities manager for the government to recover under a Miller Act performance bond, and 3. the failure of a surety's conduct to create an estoppel to assert the one-year statute of limitations. Regarding state and local bonds, 3 cases reached diverse results regarding statutory notice requirements. In Turner Construction Inc. versus American States Insurance Co. (1990), Pennsylvania Superior Court ruled that the obligee's cause of action on a performance bond accrues when the principal fails to perform, not on the obligee's first knowledge of the problem or defect. Cases relating to fidelity and financial institution bonds addressed the definition of dishonesty, liability to third parties, and causation.