Thomas D. Horne, Judge
Gerald L. Katz, Esquire
8230 Leesburg Pike, Suite 600
Vienna, Virginia 22182 Shannon J. Briglia, Esquire
8100 Boone Blvd., Suite 700
Vienna, Virginia 22182 William Atwill, Esquire
101 North King Street
Leesburg, Virginia 20176 Dear Counsel:
Defendant, Travelers Casualty and Surety Company of America (Travelers), has filed a plea in bar to the instant action by the Town of Leesburg brought on a performance bond executed in connection with a construction contract for municipal airport improvements. Travelers argues that the provisions of Va. Code Ann. §2.2-4340, limit the claim against it. That statute provides, in relevant part, that, "[n]o action against a surety on a performance bond shall be brought unless….within one year after (i) completion of the contract, including the expiration of all warranties and guarantees, or (ii) discovery of the defect or breach of warranty that gave rise to the action." Id.
While the evidence suggests substantial completion by defendant contractor, the statute is not so limited in scope. Had the General Assembly intended such a narrow construction, they would have said so. Accordingly, with respect to the limitation provided by statute with respect to the period following completion of the contract, the Town's claim against the surety is not short-circuited by the instant plea, and the case may go forward for trial on the merits of the claim stated.
The second prong of the statute under consideration would limit actions on the bond to those brought within one year, "after discovery of the defect…that gave rise to the action." Id. No distinction is drawn between latent and patent defects.
On September 1, 2005, the Town filed the instant action. On January 7, 2003, the engineer of record for the project issued a "Revised Final Punch List". By letter dated July 28, 2003, the Town notified the contractor that it would complete the items on the list and deduct the cost of completion from the contract retainage held by the Town. At the hearing on the plea, the Town oversight official on the project described the punch list defects as "symptoms" and that the underlying defects were not determined until they received the Condition Assessment prepared by The Alpha Corporation dated September 20, 2004.
The statute draws no distinction between observable defects revealed at the time of substantial completion and occupancy, and those determined upon closer inspection. A failure to do so would suggest that the "discovery defects" contemplated by the statute may be both patent and latent. In the case of the former, the punch list would serve as the triggering event for the running of the statute, and in the later, the inspection report would serve as a beginning point. Accordingly, the statute does not bar the claim raised in the Town's action on the bond, the plea will be overruled, and the case may go forward for a hearing on the merits.
Mr. Katz may draw and order consistent with this opinion to which counsel for Travelers may note her exception.
Very truly yours,
Thomas D. Horne, Judge