Bill Text: MN SF2876 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Transportation department (DOT) contracting and payment bonds modifications
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-03-21 - Referred to Transportation and Public Safety [SF2876 Detail]
Download: Minnesota-2013-SF2876-Introduced.html
1.2relating to transportation; surety bonds; amending provisions governing
1.3Department of Transportation contracting and payment bonds;amending
1.4Minnesota Statutes 2012, sections 161.32, by adding a subdivision; 574.31,
1.5subdivision 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2012, section 161.32, is amended by adding a
1.8subdivision to read:
1.9 Subd. 8. Payments; uncompensated work. (a) For purposes of this subdivision,
1.10the following terms have the meaning given:
1.11(1) "agreement for trunk highway work" means an enforceable agreement, or
1.12combination or series of agreements, by which a private contractor agrees with the
1.13commissioner of transportation to provide work related to the trunk highway system
1.14that requires surety under section 574.26, including but not limited to (i) construction,
1.15maintenance, or improvement of a trunk highway, or (ii) professional or technical
1.16services; and
1.17(2) "labor and materials" has the meaning given under section 574.26, subdivision 1.
1.18(b) The commissioner may make payments to the employee of a contractor operating
1.19under an agreement for trunk highway work if:
1.20(1) based on a review, the commissioner determines that the employee has been
1.21insufficiently compensated for labor and materials provided under the agreement;
1.22(2) the commissioner has initiated sanctions, including but not limited to withholding
1.23or suspending payment of contract funds, arranging to reject future bids under subdivision
1.241d, or terminating the contract, against the contractor;
1.25(3) a claim under chapter 574 is filed and coverage is denied; and
2.1(4) the agreement has not been finalized and closed out.
2.2(c) The commissioner may not make a payment under this subdivision that exceeds
2.3the amount specified under the agreement, including any supplemental agreements or
2.4adjustments, less the total payments previously made.
2.5EFFECTIVE DATE.This section is effective the day following final enactment and
2.6applies to contracts that are active on that date, or that are executed on or after that date.
2.7 Sec. 2. Minnesota Statutes 2012, section 574.31, subdivision 2, is amended to read:
2.8 Subd. 2. Claims on payment bonds. (a) In the event of a claim on a payment bond
2.9by a person furnishing labor and materials, no action shall be maintained on the payment
2.10bond unless, within 120 days after completion, delivery, or provision by the person of its
2.11last item of labor and materials, for the public work, the person:
2.12(1) serves written notice of claim under the payment bond personally or by certified
2.13mail upon the surety that issued the bond and the contractor on whose behalf the bond
2.14was issued, at their addresses as stated in the bond, specifying the nature and amount of
2.15the claim and the date the claimant furnished its last item of labor and materials for the
2.16public work.; and
2.17(2) serves the notice:
2.18(i) within 120 days after completion, delivery, or provision by the person of its last
2.19item of labor and materials for the public work; or
2.20(ii) with respect to a payment bond on a project of the Department of Transportation,
2.21prior to finalization and closeout of the contract under which the person furnished labor
2.22and materials.
2.23The addresses of the contractor and the surety listed on the bond must be addresses
2.24at which the companies are authorized to accept service of the notice of the claim. If an
2.25agent or attorney-in-fact is authorized to accept service of notice of the claim for the
2.26contractor or surety, that fact must be expressly stated in the bond along with the address
2.27of the agent or attorney-in-fact at which service of the notice of the claim can be made.
2.28For the purpose of this section, notice is sufficient if served personally or via certified mail
2.29to the addresses of the contractor and surety listed on the bond. The form of notice is
2.30sufficient if it is substantially as follows:
3.36(b) If the contractor providing the payment bond fails to comply with the filing
3.37requirements of section574.28 by failing to state both its address and the address of the
3.38surety providing the bond, then a claimant under the bond need not provide either the
3.39surety or the contractor written notice of its claim under paragraph (a).
3.40(c) An action to enforce a claim against the surety under the bond must be
3.41commenced:
3.42(1) within one year from the date of completion, delivery, or provision by the claimant
3.43of its last item of labor and materials for the public work stated in its notice of claim.;
4.1(2) with respect to a bond on a project of the Department of Transportation, prior
4.2finalization and closeout of the contract under which the person furnished labor and
4.3materials; or
4.4(3) if clause (2) does not apply and no notice of claim was required because the
4.5contractor providing the bond failed to comply with the requirements of section574.28 ,
4.6then any action under the bond must be commenced within one year from the actual date
4.7of completion, delivery, or provision by the claimant of its last item of labor and materials
4.8for the public work.
4.9(d) Any other person having a cause of action on a payment bond may be admitted,
4.10on motion, as a party to the action, and the court shall determine the rights of all parties.
4.11If the amount realized on the bond is insufficient to discharge all the claims in full, the
4.12amount must be prorated among the parties.
4.13(d) (e) The claimant can extend the time within which to bring an action to enforce a
4.14claim under the bond to beyond that specified in paragraph (c) either by: (1) written
4.15stipulation between the claimant and surety stating the extended deadline and executed by
4.16both parties before the expiration ofone year from the actual date of completion, delivery,
4.17or provision by the claimant of its last item of labor and materials for the public work the
4.18deadline that otherwise applies under paragraph (c); or (2) written notice extending by one
4.19year the deadline specified in paragraph (c) sent by the claimant to the surety via certified
4.20mail 90 days before the expiration of the deadline specified in paragraph (c), which notice
4.21is not objected to in a return written notice sent by the surety to the claimant via certified
4.22mail within 30 days after the surety's receipt of claimant's notice.
4.23(f) If a claimant's payment is not yet contractually duewithin one year from the
4.24actual date of completion, delivery, or provision by the claimant of its last item of labor
4.25and materials at the time an action is commenced, the court shall continue and not dismiss
4.26the action until the payment is due.
4.27EFFECTIVE DATE.This section is effective August 1, 2014, and applies to
4.28contracts executed on or after that date.
1.3Department of Transportation contracting and payment bonds;amending
1.4Minnesota Statutes 2012, sections 161.32, by adding a subdivision; 574.31,
1.5subdivision 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2012, section 161.32, is amended by adding a
1.8subdivision to read:
1.9 Subd. 8. Payments; uncompensated work. (a) For purposes of this subdivision,
1.10the following terms have the meaning given:
1.11(1) "agreement for trunk highway work" means an enforceable agreement, or
1.12combination or series of agreements, by which a private contractor agrees with the
1.13commissioner of transportation to provide work related to the trunk highway system
1.14that requires surety under section 574.26, including but not limited to (i) construction,
1.15maintenance, or improvement of a trunk highway, or (ii) professional or technical
1.16services; and
1.17(2) "labor and materials" has the meaning given under section 574.26, subdivision 1.
1.18(b) The commissioner may make payments to the employee of a contractor operating
1.19under an agreement for trunk highway work if:
1.20(1) based on a review, the commissioner determines that the employee has been
1.21insufficiently compensated for labor and materials provided under the agreement;
1.22(2) the commissioner has initiated sanctions, including but not limited to withholding
1.23or suspending payment of contract funds, arranging to reject future bids under subdivision
1.241d, or terminating the contract, against the contractor;
1.25(3) a claim under chapter 574 is filed and coverage is denied; and
2.1(4) the agreement has not been finalized and closed out.
2.2(c) The commissioner may not make a payment under this subdivision that exceeds
2.3the amount specified under the agreement, including any supplemental agreements or
2.4adjustments, less the total payments previously made.
2.5EFFECTIVE DATE.This section is effective the day following final enactment and
2.6applies to contracts that are active on that date, or that are executed on or after that date.
2.7 Sec. 2. Minnesota Statutes 2012, section 574.31, subdivision 2, is amended to read:
2.8 Subd. 2. Claims on payment bonds. (a) In the event of a claim on a payment bond
2.9by a person furnishing labor and materials, no action shall be maintained on the payment
2.10bond unless
2.11
2.12(1) serves written notice of claim under the payment bond personally or by certified
2.13mail upon the surety that issued the bond and the contractor on whose behalf the bond
2.14was issued, at their addresses as stated in the bond, specifying the nature and amount of
2.15the claim and the date the claimant furnished its last item of labor and materials for the
2.16public work
2.17(2) serves the notice:
2.18(i) within 120 days after completion, delivery, or provision by the person of its last
2.19item of labor and materials for the public work; or
2.20(ii) with respect to a payment bond on a project of the Department of Transportation,
2.21prior to finalization and closeout of the contract under which the person furnished labor
2.22and materials.
2.23The addresses of the contractor and the surety listed on the bond must be addresses
2.24at which the companies are authorized to accept service of the notice of the claim. If an
2.25agent or attorney-in-fact is authorized to accept service of notice of the claim for the
2.26contractor or surety, that fact must be expressly stated in the bond along with the address
2.27of the agent or attorney-in-fact at which service of the notice of the claim can be made.
2.28For the purpose of this section, notice is sufficient if served personally or via certified mail
2.29to the addresses of the contractor and surety listed on the bond. The form of notice is
2.30sufficient if it is substantially as follows:
3.36(b) If the contractor providing the payment bond fails to comply with the filing
3.37requirements of section
3.38surety providing the bond, then a claimant under the bond need not provide either the
3.39surety or the contractor written notice of its claim under paragraph (a).
3.40(c) An action to enforce a claim against the surety under the bond must be
3.41commenced:
3.42(1) within one year from the date of completion, delivery, or provision by the claimant
3.43of its last item of labor and materials for the public work stated in its notice of claim
4.1(2) with respect to a bond on a project of the Department of Transportation, prior
4.2finalization and closeout of the contract under which the person furnished labor and
4.3materials; or
4.4(3) if clause (2) does not apply and no notice of claim was required because the
4.5contractor providing the bond failed to comply with the requirements of section
4.6
4.7of completion, delivery, or provision by the claimant of its last item of labor and materials
4.8for the public work.
4.9(d) Any other person having a cause of action on a payment bond may be admitted,
4.10on motion, as a party to the action, and the court shall determine the rights of all parties.
4.11If the amount realized on the bond is insufficient to discharge all the claims in full, the
4.12amount must be prorated among the parties.
4.13
4.14claim under the bond to beyond that specified in paragraph (c) either by: (1) written
4.15stipulation between the claimant and surety stating the extended deadline and executed by
4.16both parties before the expiration of
4.17
4.18deadline that otherwise applies under paragraph (c); or (2) written notice extending by one
4.19year the deadline specified in paragraph (c) sent by the claimant to the surety via certified
4.20mail 90 days before the expiration of the deadline specified in paragraph (c), which notice
4.21is not objected to in a return written notice sent by the surety to the claimant via certified
4.22mail within 30 days after the surety's receipt of claimant's notice.
4.23(f) If a claimant's payment is not yet contractually due
4.24
4.25
4.26the action until the payment is due.
4.27EFFECTIVE DATE.This section is effective August 1, 2014, and applies to
4.28contracts executed on or after that date.
