[WSBARP] Contractor bond question

[Inge Fordham]

The bond wouldn’t be triggered absent an occurrence during the bond period.  It sounds like the client may be out of luck with respect to the bond.  Unfortunately, even if the contractor was insured, the CGL policy wouldn’t provide coverage absent property damage caused by an occurrence within the policy period.  It wouldn’t provide coverage for theft (or conversion) of funds.  It may still be worth going after the contractor to obtain a judgment as they are good for 10 years and can be renewed for 10 year periods thereafter.  If the contractor owns real property, you can record a judgment lien.  If the client proceeds with a lawsuit, I would also plead fraud as a fraud judgment cannot be discharged in bankruptcy (but a judgment for a general breach of contract or conversion could).

Best of luck!  I always feel horrible for clients in this scenario.  It’s so important to verify licensure, bond, and insurance when hiring a contractor.  But then hindsight is always 20/20.

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Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com>

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From: <wsbarp-bounces at lists.wsbarppt.com> on behalf of Craig Gourley <craig at glgmail.com>
Reply-To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Date: Friday, December 10, 2021 at 12:13 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Contractor bond question

Construction bond gurus.  I have a client with a contractor bond question that I hope someone has addressed previously and can share the knowledge.  Hapless homeowner hires sneaky contractor for a remodel.  Hapless pays the contractor in advance. Contractor works a couple of days and disappears.  Hapless would like to go after the bond.  So far a common and predictable outcome.  Now the fun part.  Contractor was suspended by L&I in April.  Contract was signed on June 8 for work to start June 16. Bond expired on June 13th.   Nutshell, unlicensed contractor signs a contract while the bond is in effect but starts work after it expired.  Any bond coverage?   Why does this feel like a bar question?

B. Craig Gourley
GOURLEY LAW GROUP
THE EXCHANGE CONNECTION
SNOHOMISH ESCROW
P.O. Box 1091
Snohomish, WA 98291
PH:  (360) 568-5065 (800) 291-8401
Fax: (360) 568-8092

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