When is the Surety Liable for Attorneys’ Fees and Interest on Miller Act Payment-Bond Claims?

by William H. Sturges and Daniel R. Hansen

I. INTRODUCTION

The Federal Miller Act1 Subcontractors and suppliers who furnish labor or materials directly to a

contractor, or directly to a subcontractor of the subcontractor, enjoy payment-bond rights. Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tompkins Co., 322 U.S. 102, 64 S. Ct. 890 (1944). Consequently, a second-tier subcontractor can claim on the contractor’s payment bond due to the second-tier subcontractor’s subcontract with the first-tier subcontractor, but third-tier and lower subcontractors and suppliers cannot. J.W. Bateson Company, Inc. v. United States ex rel. National Auto. Sprinkler Indus. Pension Fund, 434 U.S. 586, 98 S. Ct. 873 (1978). Though the Miller Act is clear about who may recover, it is unclear about what may be recovered. Its old codification simply stated that the claimant could recover “sums justly due.” The present codification says simply that claimants “may bring a civil action on the payment bond for the amount unpaid [and] may prosecute the action . . . for the amount due.” 40 U.S.C. § 133(b)(1) (emphasis added). And like its predecessor, the present codification says nothing about attorneys’ fees and interest.

This paper examines both attorneys’-fees and interest awards against

sureties on Miller Act payment-bond claims. It also suggests several policy arguments against imposing attorneys’ fees and interest awards on sureties.

As explained in Section II, “Attorneys’ Fees,” federal courts in most circuits

have case law derived from the U.S. Supreme Court case F.D. Rich v. U.S. ex rel. Industrial Lumber, 417 U.S. 116, 94 S. Ct. 2157 (1974), addressing recoverability of attorneys’ fees in Miller Act payment-bond claims. Not all circuits, however, are consistent in how they interpret F.D. Rich. Some require the federal court to look in part to state law to determine whether attorneys’ fees are recoverable. Most do not.

It used to be that sureties could take a narrow view of F.D. Rich and argue

that attorneys’ fees were never available to payment-bond claimants under the Miller Act. This view, however, has been under attack since the 1974 F.D. Rich decision. It is now more likely that payment-bond claimants can recover attorneys’ fees so long as they have a clause in their subcontract or supply agreement allowing them. The danger and important lesson for sureties is that

1 40 U.S.C. § 3131 et seq. Formerly, the Miller Act was codified under § 40 U.S.C § 270a et seq., and several of the cases cited in this paper refer to the old sections.

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they usually issue payment bonds for federal projects having seen only the contract between the owner/obligee and the general contractor. But if a subcontract or second-tier subcontract (which the surety likely has never seen) contains an attorneys’-fees clause, the surety may be liable for attorneys’ fees.

As explained in Section III, “Interest,” courts usually look to the relevant

state law to determine whether interest is recoverable. See, e.g., United States ex rel. Pratt Farnsworth, Inc. v. Talley, 294 F. Supp. 1345 (E.D. La. 1969) (state law in Miller Act claims controls interest rate and time when it accrues). But as this paper demonstrates, federal courts may omit this step and rely solely on what can only be described as federal common law when awarding interest.

Section IV offers several policy arguments that surety counsel could use

to resist the modern trend of holding sureties liable for attorneys’ fees and interest.

II. ATTORNEYS’ FEES Analyzing an attorneys’-fees claim in a Miller Act payment-bond action

begins with the F.D. Rich case. In F.D. Rich a second-tier subcontractor/supplier sued the general contractor and its surety on a Miller Act payment-bond claim. The High Court refused, however, to allow the second-tier subcontractor’s claim for attorneys’ fees against the general contractor and surety. 417 U.S. at 121, 94. S. Ct. at 2161. The Court followed the “American Rule” governing attorneys’-fees awards: “attorneys’ fees are not ordinarily recoverable in the absence of a statute or enforceable contract providing therefore.” Id. at 126, 94 S. Ct. at 2163. Since the Miller Act, the F.D. Rich case, and many of the cases cited throughout this paper, make clear that there is no federal statute concerning attorneys’-fees awards in Miller Act payment-bond claims; thus, the operative part of the “American Rule” seems to be “enforceable contract providing [for attorneys’ fees].” In other words, if the payment-bond claimant can show there is an enforceable attorneys’-fees clause in its contract, then the modern trend is to hold the surety liable for attorneys’ fees.

But where should the court look to decide whether an attorneys’-fees

contract clause is enforceable? One could argue that the federal courts may not look to state law. For instance, the F.D. Rich Court explained unequivocally that “the scope of the remedy [under the Miller Act] as well as the substance of the rights created thereby is a matter of federal, not state law.” Id. at 127, 94 S. Ct. at 2164. The High Court went on to explain that there is no “evidence of Congressional intent to incorporate state law to govern such an important element of the Miller Act litigation as liability for attorneys’ fees.” Id. Indeed, the Court feared that turning to state law could potentially create 50 different attorneys’-fees rules, and in the case of federal projects that are in more than one state, could lead to conflicting and confusing attorneys’-fees standards:

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Many federal contracts involve construction in more than one state, and often, as here, the parties to Miller Act litigation have little or no contact, other than the contract itself, with the state in which the federal project is located. The reasonable expectations of such potential litigants are better served by a rule of uniform national application. . . . We think it better to extricate the federal courts from the morass of trying to divine a ‘state policy’ as to the award of attorneys’ fees in suits on construction bonds. [Id. at 127-28, 94 S. Ct. at 2164]

Consequently, the Court seemed to favor a bright-line rule that attorneys’ fees are not at all controlled by state law. If such a rule is contrary to Congressional intent, then Congress could change the Miller Act:

Congress is aware of the issue. Thus, whatever the merit of arguments for a further departure from the American Rule in Miller Act commercial litigation, those arguments are properly addressed to Congress. [Id. at 131, 94 S. Ct. at 2166]

Since the F.D. Rich case makes clear that the Miller Act does not address attorneys’ fees and since the federal courts should not look to state law, it could be argued that payment-bond claimants in Miller Act cases should not be allowed to recover attorneys’ fees—at least not from the surety or parties with whom the claimant did not have a contract.2

The modern trend seems to be that federal courts are willing to award

attorneys’ fees—and interest for that matter—whenever the bond claimant has a contract clause allowing for them. Often these courts do not rely on the F.D. Rich decision. Accordingly, and disturbingly for sureties, more and more cases are being decided that simply say a bond claimant may recover attorneys’ fees against the surety if there is an attorneys’-fees clause in the bond claimant’s contract. There may be no or little analysis as to whether this decision is allowed under the Miller Act itself or the F.D. Rich decision. Many circuits make no determination about whether the attorneys’-fees contract clause is even

2 Indeed, these authors made such an argument on behalf of a surety in a recent federal district court case in North Carolina. Despite apparent absent authority from F.D. Rich, the court ruled against the surety and awarded attorneys’ fees to a second-tier subcontractor simply because there was Fourth Circuit precedent allowing such a recovery when the bond claimant had a contract clause allowing attorneys’ fees. See United States ex rel. SCCB, Inc. d/b/a Stewart Construction Co. v. P. Browne & Assoc., 2010 WL 4644438 (M.D.N.C. Nov. 9, 2010). Though the SCCB court found that Fourth Circuit precedent disposed the issue and did not require examining state law on attorneys’-fees clause enforceability, the court held that the attorneys’-fees contract clause at issue would have been enforceable under North Carolina law.

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enforceable. See, e.g., United States ex rel. Maddux Supply Co. v. St. Paul Fire & Marine Ins., 86 F.3d 332 (4th Cir. 1996). In contrast, some circuits may require the bond claimant to establish that the attorneys’-fees clause is enforceable under state law. See, e.g., United States ex rel. Reed v. Callahan, 884 F.2d 1180 (9th Cir. 1989), cert. denied 493 U.S. 1094 (1990).

The Maddux decision is typical of the “modern trend” cases and deserves

closer attention. In Maddux, a supplier of a subcontractor on a federal construction project sued the general contractor and its surety under the Miller Act. Id. at 334. The supplier and subcontractor had conducted business under the terms of a credit application for several years before the subcontractor entered into a contractual relationship with the general contractor. Id. at 334 & 336. The credit application contained a clause requiring the subcontractor to pay all costs of collecting any outstanding amount owed to the supplier, including “reasonable attorneys’ fees.” Id. at 334. After a bench trial, the district court awarded damages to the supplier, including attorneys’ fees, and the Fourth Circuit Court of Appeals affirmed the entire award. Id.

The Maddux Court had little analysis of the attorneys’-fees issue, and the

court did not address F.D. Rich. Instead, the court reasoned that the attorneys’-fees award was proper for two reasons. The first was simply that other circuits had done the same thing in similar Miller Act cases—the Eleventh Circuit in United States ex rel. Southeast Mun. Supply Co. v. National Union Fire Ins. Co. of Pittsburgh, 876 F.2d 92, 93 (11th Cir. 1989), the Fifth Circuit in United States ex rel. Carter Equip. Co. v. H.R. Morgan, Inc., 554 F.2d 164, 165-66 (5th Cir. 1977),3 and the Ninth Circuit in United States ex rel. Reed v. Callahan, supra (but failing to note that in the Reed case, the court analyzed whether the contract clause was enforceable under state law).

Aside from the “everyone else is doing it” argument, the Maddux court’s

second reason was that payment-bond claimants are entitled to recover “sums justly due.” This is probably the payment-bond claimants’ most persuasive argument. In other words, the purpose of the Miller Act is to protect payment-bond claimants and pay them everything that they are contractually entitled to recover so that they receive the benefit of their bargain. Accordingly, the Maddux court concluded:

3 The Southeast Municipal Supply case remains the law in the Eleventh Circuit. In that case the court simply cited to a Fifth Circuit case, the Carter Equipment case, and held that sureties are liable for a second-tier supplier’s attorneys’ fees simply because there was “a contractual provision between [the] supplier . . . and [the] subcontractor . . . for the recovery of attorneys’ fees.” 876 F.2d 93. The Carter Equipment case is still good Fifth Circuit law having been cited at least twice since the Fifth and Eleventh Circuits split in 1981. See United States ex rel. American Bank v. C.I.T. Constr. Of Texas, 944 F.2d 253, 256 (5th Cir. 1991) and United States ex rel. Howell Crane Serv., 861 F.2d 110, 114 (5th Cir. 1988). The court in Carter Equipment found the surety liable because (1) attorneys’ fees would be considered “sums justly due,” which the Miller Act at that time permitted a claimant to recover, and (2) the Miller Act does not expressly prohibit awarding fees against the surety or general contractor. 554 F.2d at 165-66.

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The rationale of those [Eleventh, Fifth, and Ninth Circuit] decisions—that attorneys’ fees and interest may be ‘sums justly due’ under the Miller Act—is consistent with this court’s rulings that contractors and their sureties are obligated to pay amounts owed by their subcontractors to suppliers . . . . Accordingly, if [the supplier] was entitled to interest and attorneys’ fees under its contract with [the subcontractor], it may recover interest and fees from [the general contractor] and its [surety]. [86 F.3d at 336 (internal citations omitted)]

Even though the Miller Act’s recodification eliminated the phrase “sums justly due,” courts continue to rely on this concept to award fees and interest against sureties. See, e.g., SCCB, Inc., 2010 WL 4644438 at *5.

III. INTEREST The Miller Act is silent as to the recovery of interest, and therefore, federal

courts will look to state law. United States v. American Manufacturers Mut. Cas. Co., 901 F.2d 370, 372-73 (4th Cir. 1990); SCCB, Inc., 2010 WL 4644438 at *8. Accordingly, the surety should look to the relative state law to determine whether it is liable for pre- or postjudgment interest and to determine when such interest begins to run. Typically, the state-law analysis results in the surety being liable for interest from the date that the bond-claimant’s subcontract was breached. See J.F. White Engineering v. U.S. ex rel. Pittsburgh Plate Glass, 311 F.2d 410 (10th Cir. 1962). But even if the surety appears to have a good argument to avoid paying interest or have the interest calculation begin at a favorable date, the surety must beware of “sweeping” circuit-court decisions that award interest (usually along with attorneys’ fees) with little or no analysis. See, e.g., Maddux, 86 F.3d at 334.

In Maddux, the subcontractor’s credit application with the supplier stated

that “a 1½% monthly service charge will be added to all accounts not paid within 30 days after due date.” Id. Applying the same reasoning it had used for attorneys’ fees, the court held that since the supplier was entitled to interest from the subcontractor under the credit application, it could recover this interest from the general contractor and surety as a “sum justly due” under the Miller Act. Id.

The Maddux court, however, did not specifically analyze state law to

determine whether interest was recoverable against a surety, and if so, when that interest began to run. In the SCCB, Inc. case, the surety’s lawyers pointed this out to the court while presenting arguments that under North Carolina statutory law, a surety cannot be liable for interest until the date of judgment against the surety, and only then, postjudgment interest would be capped at the statutory

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rate of eight percent.4 The SCCB, Inc. court refused to entertain the surety’s argument that state law prohibited prejudgment interest against the surety, instead holding that since the Maddux court awarded interest to the bond claimant against the surety as a “sum justly due,” it would do the same.

The Maddux and SCCB cases notwithstanding, not all is gloom and doom

for the surety. If the bond claimant unjustifiably delayed notifying the surety of its bond claim, courts usually will award interest against the surety only from the date the surety gets notice. See, e.g., American Auto Ins. v. U.S. ex rel. Luce, 269 F.2d 406 (1st Cir. 1959). Also, if the bond claimant’s damages were truly not known or reasonably calculable (often described as “not liquidated”) prior to suit being filed, then there may be no prejudgment interest award against any party, including the surety. See, e.g., United States ex rel. W.A. Rushlight Co. v. Davidson, 71 F. Supp. 401 (D.C. Idaho 1947). Or, if prejudgment interest is allowed in such a case, the surety’s liability commences only from the date suit was commenced. United States ex rel. Belmont v. Mittry Bros. Constr., 4 F. Supp. 216 (D.C. Idaho), aff’d in part, 75 F.2d 79 (1933).

So what is the lesson for sureties? On the one hand, the authorities refer

the courts to state law to decide interest awards. But on the other hand, they may very well simply cite to a federal-court decision awarding interest without any state-law analysis. In fairness to the latter courts, those courts may simply look to state law to decide whether a contract rate of interest is enforceable. And if it is enforceable, then they may simply award that rate against the surety, regardless of whether the surety has other state-law arguments against paying interest. In spite of the unfavorable decision in SCCB, a surety should vigorously oppose or limit interest awards by whatever state-law means are available, especially if the state contains a penal-bonds statute like North Carolina.

Examples of some state-law interest rules are as follows:

4 North Carolina appears to except penal bonds from prejudgment interest and allows postjudgment interest only at the legal rate. See N.C. Gen. Stat. § 24-5. The relevant language is as follows:

(a) Actions on Contracts. In an action for breach of contract, except an action on a penal bond, the amount awarded on the contract bears interest from the date of breach. . . . (a1) Actions on Penal Bonds. In an action on a penal bond, the amount of the judgment, except the costs, shall bear interest at the legal rate from the date of entry of judgment under G.S. 1A-1, Rule 58, until the judgment is satisfied. [N.C. Gen. Stat. § 24-5(a) & (a1) (emphasis added)].

Thus, a payment-bond claimant cannot recover prejudgment interest on its payment-bond claim. The claimant also could recover only postjudgment interest at the 8% legal rate and not at the higher rate stated in the lower-tier subcontract.

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North Carolina • Legal rate 8% pre- and postjudgment. N.C. Gen. Stat. § 24-1. • Interest accrues when the contract is breached. Id. at § 24-5(a). • Contract interest rates are enforceable, but contract rates apply

postjudgment only if the contract specifically states that the rate applies postjudgment. Id.

• The above notwithstanding, prejudgment interest is not collectible on “penal bonds,” and postjudgment interest on penal bonds is capped at the legal rate of 8%. Id. at 24-5(a1).

South Carolina

• Legal rate 8.75% prejudgment. S.C. Code Ann. § 34-31-20(A). • Postjudgment interest rate is the prime rate as ordered by the state

Supreme Court each year, plus four percentage points. Id. at 34-31-20(B).

• Interest accrues when a sum certain becomes “demandable.” Welding Works v. K&S Constr., 332 S.E.2d 102 (S.C. App. 1985).

• Contract rates are enforceable if the contract identifies rates that differ from the legal rates. Burnett Dubose Co. v. Starnes, 324 S.E.2d 651 (S.C. App. 1984).

Georgia

• Legal rate 7% prejudgment. Ga. Code Ann. § 7-4-2. • Postjudgment interest rate is the prime rate plus three percentage

points. Id. at § 7-4-12. • Interest accrues when a party becomes legally bound to pay its

obligation. Id. at § 7-4-15. • Contract rates are enforceable if the contract identifies rates that

differ from the legal rates. Id. at § 7-4-2 & 7-4-12. • Sureties can be made to pay interest up to 25% of their bond

obligations if they fail to pay their bond obligations in bad faith, and within 60 days that such obligations became due. Id. at § 10-7-30.

Alabama

• Legal rate 6% prejudgment. Ala. Code § 8-8-10. • Postjudgment interest rate is 12%. Id. • Interest accrues when the contract is breached and the amount

owed is liquidated. Id. • Contract interest rates are generally enforceable, but certain

statutory caps may apply. Id. at § 8-8-1.

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IV. PUBLIC POLICY ARGUMENTS AGAINST HOLDING SURETIES LIABLE FOR SUBCONTRACTOR/SUPPLIERS’ ATTORNEYS’ FEES AND INTEREST There are several policy arguments against allowing a

subcontractor/supplier to recover attorneys’ fees from the surety. Policy arguments, however, may find little support in the federal courts. For example, the Maddux court upheld the attorneys’-fees award even though the attorneys’-fees clause was not in the supplier’s subcontract but was contained in a credit application that the supplier had entered into three years before the federal project. 86 F.3d at 336. These authors have not found court decisions where the policy arguments offered here have been analyzed.

1. The Surety Lacks Privity With or Knowledge of the Subcontractor/Supplier

Principal among policy arguments for the surety is that the surety may not

be aware that lower-tier subcontractors/suppliers even exist. When the surety agrees to issue a payment bond for a project, the only contract it may see is the one between the owner/obligee and the general contractor. It may not know which subcontractors the general contractor is going to hire. It certainly will not know which sub-subcontractors and lower-tier subcontractors/suppliers may be hired. So the result of Maddux and similar decisions is that a surety could be liable for attorneys’ fees without privity of contract, without some form of equitable or constructive knowledge of a contract, and with no practical way to predict potential contract liability going forward. How can this be? One could understand such a rule if there were a federal statute providing it. But we know that the Miller Act does not address the issue. Thus, there seems to be an evolving federal common law that is coming down decidedly against the sureties.5

5 In Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817 (1938), Justice Brandeis famously, and perhaps prematurely, wrote that “except in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State. . . . There is no federal common law.” Id. at 78, 58 S. Ct. at 822. As the esteemed federal-practice treatise writers Wright and Miller point out, Justice Brandeis’ “statement is not completely accurate.” 19 Charles A. Wright, et al., Federal Practice and Procedure § 4514 (2d ed. 1996). Courts continue to create federal common law, but the practice of doing so is not “common.” Nevertheless, there are certain areas that tend to invite federal common law, and one of those is where a statute addresses the area of law at issue but is missing some detail that is needed to fully adjudicate the dispute—sometimes referred to as “filling the interstices.” Id. at § 4516. In Miller Act cases, there is a statute that addresses most aspects of a payment-bond claim in a federal project. But the statute is silent on interest and attorneys’ fees. Yet the statute has historically expressed a purpose to compensate the claimant for all sums “justly due.” Thus, decisions such as Maddux, may be needed interstitial federal common law.

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2. The Surety is “Darned” if it Pays the Claimant and “Darned” if it Contests the Claim

A surety is a secondary obligor in Miller Act construction cases. If the contractors fail to pay their subcontractors and suppliers, then those subcontractors and suppliers have a secondary source to look to for payment. That secondary source is the payment bond. But just because a payment-bond claimant makes a claim does not mean the claimant is entitled to be paid. The claimant’s work may be defective or incomplete. These possibilities justify the surety and its principal contesting the claim. On the other hand, fearing interest at a high contract rate and attorneys’ fees, the surety may be inclined to pay the claim, even if it is suspect. By paying the claim, however, the surety risks losing its right to be indemnified by the bond principal and other indemnitors. This is because the surety issues a bond on a construction job knowing that it is not an insurer, but merely lending its credit and promising to pay if its principal fails to do so. Once the surety makes a payment, it has a right of indemnity against its principal and indemnitors to be completely reimbursed. Accordingly, the surety usually enters into general indemnity agreements with its principal and indemnitors to assure its right to be reimbursed if the surety ever has to pay a payment-bond claim. But if the surety pays the claim when its principal believes the claim should not have been paid because the claimant’s work was defective or incomplete, the principal and indemnitors can use that argument to resist indemnifying the surety. Sometimes this is called the “payment in bad faith” defense. Thus, a surety is in a nearly irreconcilable dilemma or “catch-22.” If the surety could be liable for a high contract rate of interest or attorneys’ fees that it never agreed to, the surety will have incentive to pay dubious payment-bond claims and risk being unable to get reimbursed by its principal and indemnitors. This is another reason why taking the narrow view of the F.D. Rich holding – that attorneys’ fees should never be recoverable – makes sense. It is also a logical reason why the North Carolina legislature, for example, would relieve penal bonds from prejudgment interest and contract rates of interest in § 24-5 (a1). If the United States were to amend the Miller Act to allow attorneys’ fees and prejudgment interest against sureties, then sureties could adjust their premiums and underwriting practices accordingly to plan for such potential extra liability. 3. A Surety’s Liability for Prejudgment Interest and Attorneys’ Fees is Unfair

to Other Bond Claimants. There is also a substantial public-policy purpose to limit payment-bond

claims to amounts equal to labor and materials. Payment bonds are penal bonds and have a cap on liability. The cap is the estimated total cost for labor and materials on the project. It does not include amounts for interest and attorneys’ fees. Thus, in allowing claims for attorneys’ fees and interest under the Miller Act, there may not be a sufficient amount of bond funds to cover all claims. Later

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claimants would not get paid for their labor and materials if earlier claimants receive not only their labor and materials, but also attorneys’ fees and interest.

4. Recovering Attorneys’ Fees Against the Surety for Litigation Between the

Second-Tier Subcontractor/Supplier and First-Tier Subcontractor is Unfair Making the surety liable for a second-tier subcontractor/supplier’s attorneys’ fees is fair only if the attorneys’ fees are incurred in litigation between the second-tier subcontractor and the surety. But logic and litigation experience suggest that a high percentage of a second-tier subcontractor’s attorneys’ fees was incurred in the legal battle and discovery exchanges with the first-tier subcontractor. Only a small percentage of the second-tier subcontractor’s attorneys’ fees, if any, would concern litigating against the surety or its principal, the general contractor. In any event, it would be difficult to separate the amount of attorneys’ fees attributable to litigation between the second-tier subcontractor and first-tier subcontractor versus litigation between the second-tier subcontractor and the surety/principal. Thus, awarding attorneys’ fees against the surety is both unfair and hard to measure.

V. CONCLUSION

The modern trend is to award attorneys’ fees against the surety whenever the bond claimant’s contract contains an attorneys’-fees clause. In a minority of districts, the court might examine state law to determine whether the attorneys’-fees clause is enforceable. But in spite of the narrow view of F.D. Rich—that attorneys’ fees should not be recoverable—many districts will readily find precedent for awarding attorneys’ fees without determining whether the contract’s attorneys’-fees clause is enforceable. These district courts simply “assume” the clause is enforceable or they are applying an emerging federal common-law principle. The same federal common law has crept into federal decisions that now seem to routinely award interest against sureties. Nevertheless, interest is still largely state-law driven, and sureties should be on the look out for state laws that either eliminate interest against sureties or calculate interest at terms more favorable to sureties than other parties.

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BIOGRAPHY OF DANIEL R. HANSEN DANIEL R. HANSEN is a partner in the litigation practice group in the Charlotte, North Carolina office of Shumaker, Loop & Kendrick, LLP. His principal areas of practice are commercial and business litigation, construction law, fidelity and surety law, and wrongful-death and severe personal injury litigation. Mr. Hansen has extensive experience in representing businesses of all sizes in a variety of legal disputes and commercial transactions. He devotes approximately fifty percent of his practice to construction and surety law, representing contractors, owners, sureties and construction materials manufacturers. Mr. Hansen has extensive experience representing window manufacturers in commercial and residential claims, both in federal and state courts throughout the Southeast. He also has substantial experience in shareholder disputes, broker-dealer litigation, non-compete litigation, insurance bad-faith litigation, coverage disputes, representation of local governments and non-profit organizations and high-value wrongful-death and personal-injury claims. REPRESENTATIVE ARTICLES

• Co-Author, “Men Behaving Badly: What are the Surety’s Defenses to the Obligee’s Latent-Defect Claims When the Principal and Obligee’s Employees Act Fraudulently?” Northeast Surety Conference, September 23-25, 2009, Atlantic City, New Jersey, and Southeast Surety Conference, April 14-16, 2010, Charleston, South Carolina.

• Co-Author, "North Carolina," in Performance Bond Manual of the 50 States, District of Columbia, Puerto Rico and Federal Jurisdictions 429-56 (L. Lerner & T. Baum eds. 2006).

• Co-Author, "The Employer's Guilty Plea as a Possible Bar to Fidelity Bond Claims," 16th Annual Northeast Surety and Fidelity Claims Conference Proceedings, sect. 11, pp. 1-11 (September 2005).

• "Do We Need the Bar Examination? A Critical Evaluation of the Justifications for the Bar Examination and Proposed Alternatives," 45 Case Western Res. L. Rev. 1191, 1995.

• Co-Author, "The Hasty Embrace of Critical Thinking by Business Law Educators," 9 J. Legal Stud. Educ. 515, 1991.

• Co-Author, "Critical Thinking is Distinct from Thinking Like a Lawyer," in Selected Papers of the American Business Law Association National Proceedings 169-284 (D. Herron ed. 1990).

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PRESENTATIONS

• "The Fundamentals of Construction Contracts: Understanding the Issues in North Carolina," Lorman Education Services Seminar, Asheville, North Carolina, December 11, 2008.

• "The Fundamentals of Construction Contracts: Understanding the Issues in North Carolina," Lorman Education Services Seminar, Charlotte, North Carolina, July 22, 2008.

• Co-Author and Lecturer, "Update on Civil Practice Basics," Mecklenburg County Bar Association, February 2005.

• Co-Author and Lecturer, "Litigation: Basics A to Z," Mecklenburg County Bar Association, December 2003. SETTLEMENTS, VERDICTS AND REPORTED DECISIONS

• 2010. Excluded experts and obtained summary judgment in multi-million dollar products-liability case. Snoznik v. JELD-WEN, INC., 2010 WL 1924483 (W.D.N.C. May 12, 2010)

• 2008. Negotiated $4 million settlement for traumatic-brain injury victim (details confidential).

• 2007. Achieved $2.64 million settlement with taverns for wrongful-death victims even though there were no eye-witnesses who would testify that they saw the drunk driver being served alcohol while intoxicated. http://www.slk-law.com/pdf/nc-lawyers-weekly-article.pdf.

• Oct. 2, 2007. Overturned summary judgment in reported decision: Park East Sales, LLC v. Clark-Langley, Inc., 186 N.C. App. 198, 651 S.E.2d 235 (2007), rev. denied, 362 N.C. 360, 661 S.E.2d 736 (2008). http://www.aoc.state.nc.us/www/public/coa/opinions/2007/pdf/061496-1.pdf.

• Dec. 1, 2000. Obtained highest soft-tissue injury jury verdict in county history, per judge presiding in: Dr. Stephen R. Byrd v. Moddassir M. Ali, Davidson County Superior Court, case no. 99-CVS-2352. EDUCATION • Case Western Reserve University 1995, J.D., magna cum laude, Order of the Coif, law review

• Bowling Green State University 1990, B.A., summa cum laude, Phi Beta Kappa

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BIOGRAPHY OF WILLIAM H. STURGES WILLIAM H. STURGES has extensive experience representing fidelity and surety companies in all types of litigation. He has been a trial attorney for over 30 years, has a Martindale-Hubble Rating of AV, and has been repeatedly selected as a North Carolina Super Lawyer and for inclusion in Best Lawyers of America. He has taught trial advocacy for the National Institute of Trial Advocacy at their regional programs for over 20 years. Mr. Sturges has written numerous articles on surety and fidelity law and is co-author of the North Carolina Section of the Performance Bond Manual published by the ABA in 2005. He is a Member of the North Carolina Bar and is admitted to the federal courts in North Carolina and Fourth Circuit Court of Appeals. He received his Juris Doctorate from Wake Forest University (cum laude) and his BA from Washington & Lee University (cum laude).