CPLR 5001 Does Not Expand a Surety’s Liability Beyond the Bond: No Prejudgment Interest Under Payment Bonds Limited to “Labor, Materials, and Equipment”

Introduction

In Stone Cast, Inc. v. Couch, Dale Marshall P.C., 2025 NY Slip Op 05860 (App Div, 3d Dept, Oct. 23, 2025), the Third Department clarified a consequential point at the intersection of construction suretyship and legal malpractice: when a payment bond unambiguously limits the surety’s obligation to amounts for “labor, materials, and equipment,” a claimant cannot recover prejudgment interest from the surety by invoking CPLR 5001. Because the surety’s liability is strictly cabined by the bond’s terms, CPLR 5001 does not operate to expand that liability. This principle, in turn, proved dispositive of the plaintiff’s legal malpractice claim, which failed on causation because the “lost” prejudgment interest was not legally recoverable from the surety in the first place.

The decision arose from cross-appeals in a legal malpractice action brought by Stone Cast, Inc. (a subcontractor) against its former counsel—Couch, Dale Marshall P.C. and attorney Mark W. Couch—relating to counsel’s handling of Stone Cast’s claims under a payment bond issued by Federal Insurance Company in connection with a Fordham University construction project. The Supreme Court (McGahay, J.) had partially granted defendants’ motion for summary judgment and denied Stone Cast’s cross-motion. The Third Department modified, granting defendants’ motion in full and dismissing the complaint.

Background and Procedural History

Project and bond: Fordham University hired a general contractor (Jeffrey M. Brown Associates, Inc.). The general contractor and owner procured a payment bond from Federal Insurance Company for “labor, materials and equipment” furnished under the construction contract.
Underlying disputes:
- 2005–2014: After the general contractor terminated Stone Cast, Stone Cast (represented by the defendants) sued the general contractor and, in December 2014, obtained a judgment of $762,168.58—comprised of $452,211.20 in damages and $309,957.38 in prejudgment interest (CPLR 5001), calculated from the date of the general contractor’s breach.
- 2016–2017: Stone Cast pursued the surety under the payment bond and in November 2016 obtained an award of $452,211.20 “with interest from April 10, 2015,” identified as the earliest date of the surety’s breach of the bond. The First Department affirmed, and Stone Cast satisfied that judgment on November 14, 2017.
Present malpractice action (2020): Stone Cast alleged that defendants’ failures—principally noncompliance with bond notice requirements—deprived it of $309,957.38 in prejudgment interest (the amount awarded in the 2014 judgment against the general contractor). Stone Cast sued for legal malpractice, breach of contract, and breach of fiduciary duty.
Supreme Court ruling: Partial summary judgment for defendants; denial of Stone Cast’s cross-motion.
Third Department disposition: The appellate court granted summary judgment to defendants in full, dismissing the complaint.

Summary of the Opinion

Writing for a unanimous panel, Reynolds Fitzgerald, J., held that the payment bond was unambiguous and limited the surety’s obligation to “pay for labor, materials, and equipment furnished for use in the performance of the construction contract.” Because the bond contained no commitment to pay prejudgment interest, and because a surety’s liability “is defined solely by the language of the bond,” the court ruled that prejudgment interest could not be recovered from the surety in this case.

Stone Cast’s reliance on CPLR 5001—arguing that statutory prejudgment interest is mandatory in contract cases regardless of the bond’s language—was rejected. The court reiterated that CPLR 5001 supplies a general rule for breach of contract litigation but does not expand a surety’s obligations beyond the bond’s terms. Applying the canon expressio unius est exclusio alterius, the court further reasoned that the omission of interest from the bond reflects the parties’ intent not to include it.

Because prejudgment interest was not recoverable from the surety under this bond, Stone Cast could not establish that any alleged attorney negligence proximately caused the loss of such interest or that Stone Cast would have prevailed “but for” counsel’s conduct. Accordingly, the legal malpractice claim failed as a matter of law, and defendants were entitled to summary judgment dismissing the complaint in its entirety.

The court also deemed the breach of fiduciary duty theory abandoned and, in any event, duplicative of legal malpractice.

Detailed Analysis

1) Precedents and Authorities Cited

Legal malpractice standards:
- Bachman-Richards v Pomeroy, 220 AD3d 1136 (3d Dept 2023): Elements—(i) deviation from the standard of care, (ii) proximate causation of actual damages, and (iii) “but for” success on the underlying claim.
- Scott v Schwartz, 236 AD3d 1273 (3d Dept 2025): Restates the same framework and the summary judgment burden to negate at least one element.
- Kaufman v Medical Liab. Mut. Ins. Co., 121 AD3d 1459 (3d Dept 2014), lv denied 25 NY3d 906 (2015): Confirms dismissal where plaintiff cannot prove causation or damages.
Contract interpretation doctrine:
- Chimart Assoc. v Paul, 66 NY2d 570 (1986); Teitelbaum Holdings v Gold, 48 NY2d 51 (1979): Interpretation of an unambiguous contract is a question of law for the court; give language its plain and ordinary meaning.
- Town of Wawarsing v Camp, Dresser & McKee, Inc., 49 AD3d 1100 (3d Dept 2008); Cerand v Burstein, 72 AD3d 1262 (3d Dept 2010); Lok-N-Logs, Inc. v Leatherstocking Coop. Ins. Co., 237 AD3d 1295 (3d Dept 2025): Reinforce plain-meaning rule and judicial role in unambiguous contracts.
- Quadrant Structured Prods. Co., Ltd. v Vertin, 23 NY3d 549 (2014): Expressio unius est exclusio alterius—omission implies intentional exclusion.
- Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 30 NY3d 572 (2017): Courts must honor contractual limitations of liability because they reflect bargained-for risk allocation.
Suretyship principles:
- Tornatore v Cohen, 185 AD3d 1394 (4th Dept 2020), lv dismissed 36 NY3d 944 (2020): A surety’s obligation is defined solely by the bond’s language and may not be judicially expanded.
- Matter of Seneca Ins. Co. v People, 40 AD3d 1151 (3d Dept 2007); Mid-State Precast Sys. v Corbetta Constr. Co., 202 AD2d 702 (3d Dept 1994), lv dismissed 84 NY2d 923 (1994), 86 NY2d 855 (1995): Surety obligations are strictly construed.
- Davis Acoustical Corp. v Hanover Ins. Co., 22 AD2d 843 (3d Dept 1964): Longstanding rule limiting a surety’s liability to the scope and meaning of its undertaking.
Cases distinguished:
- United States Fid. & Guar. Co. v Orix Credit Alliance, 290 AD2d 504 (2d Dept 2002): Bond at issue promised payment “as required by any final order,” which encompassed interest; the central issue was whether the order was final, not whether interest was generally recoverable against sureties.
- Saratoga Spa & Bath v Beeche Sys. Corp., 230 AD2d 326 (3d Dept 1997), lv dismissed & denied 90 NY2d 979 (1997): Prejudgment interest was limited to the period of the surety’s default, not the principal’s earlier default.

2) The Court’s Legal Reasoning

The court proceeded in three steps:

Unambiguous bond controls: The payment bond obligated the surety to “pay for labor, materials, and equipment.” It made no promise to pay interest. Under New York law, an unambiguous contract is enforced according to its plain terms; courts may not add terms or expand obligations beyond the agreement’s language.
CPLR 5001 does not expand surety liability: Although CPLR 5001 generally provides for prejudgment interest in breach of contract actions, it does not override the parties’ contract where the undertaking is narrower. In surety cases, the bond defines the surety’s exposure. The omission of interest in this bond implies its exclusion (expressio unius). Moreover, New York’s strong policy of enforcing contractual allocations of risk (Nomura) bars courts from grafting an interest obligation into a bond that limits payment to specific categories (labor, materials, equipment).
No malpractice causation because the interest was unrecoverable: Stone Cast’s claimed damages were the $309,957.38 in prejudgment interest awarded against the general contractor in 2014. But that amount was not recoverable against the surety under the bond’s terms. Therefore, even assuming negligence in handling notice requirements, Stone Cast could not establish that it “would have succeeded” in obtaining that interest from the surety, nor that any negligence proximately caused the loss. Summary judgment dismissing the malpractice claim was required.

The court also addressed Stone Cast’s arguments from cases where interest was awarded against sureties. Those cases involved materially different undertakings (e.g., a bond promising payment “as required by any final order”) or limited interest to the period of the surety’s own default. Neither scenario allowed Stone Cast to recover the earlier prejudgment interest attributable to the principal’s breach when the bond here contained only the “labor, materials, and equipment” language.

3) Reconciling the Case History: Which “Prejudgment Interest” Is at Issue?

A potential point of confusion is that, in the earlier 2016 surety action, the court awarded Stone Cast interest “from April 10, 2015,” the date of the surety’s breach. The present malpractice claim, by contrast, sought the $309,957.38 of prejudgment interest awarded in 2014 against the general contractor—interest measured from the principal’s earlier breach, not the surety’s.

The Third Department’s holding should thus be understood as follows: under this bond’s narrow language, Stone Cast could not recover the principal’s earlier prejudgment interest from the surety. The court’s broad phrasing that “prejudgment interest was not recoverable from the surety” is tethered to the bond language and the particular category of interest Stone Cast claimed as damages in the malpractice action. The distinction drawn in Saratoga Spa & Bath—limiting interest to the surety’s own default—underscores why the 2016 award (interest from the surety’s default) does not support recovering the additional 2014 interest (measured from the principal’s default), which the bond did not encompass.

4) Impact and Forward-Looking Implications

The ruling has significant implications for construction, surety, and professional liability practice in New York:

Surety exposure is bond-text driven: Claimants cannot rely on CPLR 5001 to secure prejudgment interest from a surety when the bond limits payment to “labor, materials, and equipment.” Unless the bond affirmatively provides for interest (e.g., by promising payment of “sums due,” “amounts adjudged,” or “as required by any final order”), prejudgment interest will not be available.
Drafting and procurement of bonds: Owners and contractors selecting bond forms (e.g., standard AIA forms versus bespoke language) should be mindful that interest exposure tracks exact text. Subcontractors and suppliers seeking fuller remedies should advocate for bond language expressly including interest or amounts “as adjudged.”
Litigation strategy: Claimants should target the principal for historical prejudgment interest and, where the bond permits, seek interest only from the surety’s own default. Counsel should plead and prove the bond’s language to match the interest sought.
Legal malpractice causation: Plaintiffs cannot manufacture malpractice damages from categories of recovery that were legally unavailable in the underlying matter. This decision is a robust reminder that the “case within a case” test is unforgiving: if the underlying recovery was not legally attainable, malpractice claims fail on causation and damages.
Appellate practice caution: The court deemed the fiduciary duty theory abandoned and duplicative when not briefed—underscoring the necessity to preserve, brief, and differentiate all claims on appeal.

Complex Concepts Simplified

Payment bond versus performance bond: A payment bond assures that claimants (subcontractors, suppliers) will be paid for labor, materials, and equipment furnished to a project. A performance bond assures completion of the work. The scope of a surety’s obligation is set by the bond’s language.
Prejudgment interest (CPLR 5001): A statutory add-on to contract damages intended to compensate for the time value of money between breach and judgment. While generally “mandatory” once liability and damages are established in contract, parties may contractually limit or waive certain remedies, and a surety’s exposure is circumscribed by its bond.
Expressio unius est exclusio alterius: A contract canon meaning “the expression of one thing implies the exclusion of others.” If a bond specifies payment for “labor, materials, and equipment” and is silent on interest, courts infer that interest was intentionally omitted.
“Case within a case” in legal malpractice: To prove causation, a malpractice plaintiff must show that, absent the attorney’s negligence, it would have prevailed in the underlying action and recovered the damages now claimed. If the underlying law would not have allowed that recovery, the malpractice claim fails.
Unambiguous contract interpretation as a matter of law: When contract language is clear, courts decide its meaning on summary judgment; no factual trial is needed to interpret plain text.

Key Takeaways

New rule articulated: CPLR 5001 does not expand a surety’s obligations where the payment bond confines liability to “labor, materials, and equipment.” Prejudgment interest is not recoverable from the surety unless the bond so provides.
For malpractice plaintiffs, damages premised on unrecoverable categories (like prejudgment interest not provided by the bond) cannot satisfy proximate cause or “but for” success in the underlying action.
Practitioners should closely inspect bond language at the outset; interest and fees must be explicitly provided for if they are to be recovered from the surety.
Distinguish interest measured from the principal’s breach from interest measured from the surety’s own default. The latter may sometimes be recoverable depending on bond text and case law; the former generally is not when the bond is narrowly worded.
Claims duplicative of legal malpractice (e.g., fiduciary duty) risk dismissal; failure to brief them on appeal risks abandonment.

Conclusion

Stone Cast, Inc. v. Couch, Dale Marshall P.C. cements a clear, text-driven approach to surety liability in New York: a payment bond’s plain terms govern, and a court will not use CPLR 5001 to supply prejudgment interest where the bond narrowly covers only “labor, materials, and equipment.” That holding compelled dismissal of Stone Cast’s malpractice suit for lack of causation; the interest it claimed was never obtainable from the surety under the bond. The decision offers practical guidance for drafting and litigating payment bond claims, underlines the strictures of the malpractice “case within a case,” and reinforces New York’s commitment to enforcing contractual allocations of risk as written.

Case: Stone Cast, Inc. v. Couch, Dale Marshall P.C., 2025 NY Slip Op 05860 (3d Dept, Oct. 23, 2025). Panel: Garry, P.J., Clark, Aarons, Reynolds Fitzgerald, and Ceresia, JJ. Opinion by Reynolds Fitzgerald, J.

This commentary is for informational purposes only and does not constitute legal advice.