November 13, 2013 South Carolina Supreme Court published opinion

Hard Hat Workforce Solutions, LLC v Mechanical HVAC Services, Inc., Great American Insurance Company

Hard Hat provided labor on a high school project under a subcontract with Mechanical. It communicated by email with the main subcontractor for mechanical and plumbing work during that time. When Mechanical failed to pay Hard Hat, it sued for payment under a performance bond issued by Great American. The circuit court granted summary judgment to Great American ruling Hard Hat failed to comply with South Carolina Code 29-5-440. The case was certified for review and the Court, with two justices concurring in a separate opinion, reversed. The majority held that the preface bond was a common law bond as no statute required it to be purchased and the bond did not reference 29-5-440. Thus, Hard Hat was not required to give notice under 29-5-440. The majority noted this result supports the policy of securing payment for subcontractors and, as the bonds are like insurance, parties should be allowed to provide greater coverage if desired. Alternatively, the majority held that there was a genuine dispute at to whether notice was given and the circuit court erred by requiring email notices go to the subcontractor’s permanent office as there is no requirement in 29-5-440 that this happen and Hard Hat cannot control where the email would be opened and the person emailed held himself out as the project manager. Two justices field a separate opinion concurring with reversal. They argued that 29-5-440 applies to all construction performance bonds whether mentioned in the bond or not, that the New York case relied upon by the majority is no longer good law, but, that there are genuine facts as whether hard Hat gave notice and thus the justices concurred in reversal.

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