In a unanimous decision, the Connecticut Supreme Court has declared that a public works payment bond surety does not forfeit its substantive defenses to a bond claim by failing either to pay or deny a claim within the statutorily prescribed 90-day period. The ruling was made in a lawsuit brought by a subcontractor and defended by Robinson+Cole on behalf of the payment bond surety to the prime contractor.

The Court rejected the subcontractor’s attempt to read a judicial default provision into the terms of Connecticut’s “Little Miller Act,” Conn. Gen. Stat. § 49-41, et. seq., which would have deprived a surety of its substantive defenses to a payment bond claim in the event it failed to make payment or issue a denial within 90 days. Based on the absence of an express statutory penalty for noncompliance, its finding that the 90-day response period is not related to the statute’s essential purpose, and a consideration of the unwarranted windfall such a rule would create, the Court declined to read “such a draconian penalty" into the statute. Instead, the Court held that a surety’s failure to make payment or issue a formal denial within 90 days “is tantamount to a denial of the claim,” thereby entitling the claimant to bring suit to enforce its claim for payment. In so holding, the Court characterized the 90-day statutory period as a brief window of time during which both parties are encouraged to seek to resolve the claim without the need for litigation rather than as a strict deadline for the surety's response. The Court’s opinion maintains an orderly and logical claims process, avoids an unwarranted windfall, and ensures that the rights of all players, including sureties, contractors, and subcontractors/suppliers, are protected.