Statutory Amendment Extending Payment Bond Lawsuit Deadline Does Not Apply Retroactively
New York amended its payment bond law in 2011 to extend the timetable for filing a claim against a public project payment bond. The former deadline was one year after submitting an invoice for final payment. The amended law requires bond claim lawsuits to be filed within “one year from the date on which the public improvement has been completed and accepted by the public owner.” A recent NY appellate court decision has held that this amendment does not apply retroactively.
The bond claimant’s last invoice was in March 2011, but the lawsuit was not filed until June 2012. The project was declared complete as of August 2011. Thus, under the law existing before August 3, 2011 (when the new law was enacted), the bond claim was late. If the new law were to be applied retroactively, the bond claim would be timely.
The NY Appellate Division held that the payment bond law amendment does not apply retroactively. Although enacted as an emergency measure, effective as of the date of enactment, nothing in the law suggested that it was intended to apply retroactively. The statutory presumption is that a new law applies only prospectively. Also, the court noted that a surety bond is a form of contract, and “a contract generally incorporates the state of the law in existence at the time of its formation.” The case is Clean Earth of N. Jersey, Inc. v Northcoast Maintenance Corp., 2016 N.Y. App. Div. LEXIS 5979 (Sept. 21, 2016) (LEXIS subscription required).