Protecting Public Infrastructure Projects and Surety Rights

WASHINGTON, D.C. – The Surety & Fidelity Association of America (SFAA) played a significant role in a critical Minnesota Supreme Court decision reaffirming the priority of surety rights on public construction projects.

In United Prairie Bank v. Molnau Trucking LLC, the Court reversed lower court rulings that when a surety steps in to pay subcontractors and suppliers after a contractor defaults, the surety’s equitable subrogation right to recover bonded contract funds takes precedence over the existing security claims of a bank. The full Court ruling can be read here.

SFAA submitted an amicus brief supporting the surety’s position, which the Court cited in its opinion. The Court also noted the critical public policy role sureties play in completing public projects and keeping costs in check.

This case reflects SFAA’s ongoing commitment to filing amicus briefs in courts across the country on behalf of its members. Through this work, SFAA ensures that critical legal issues affecting the surety and fidelity industry are clearly presented to the judiciary and that longstanding protections are preserved.

“This decision reinforces longstanding legal protections that allow sureties to step in when contractors default, helping keep public projects on track, costs under control, project risks managed, and fiscal responsibility maintained for taxpayers,” said Julie Alleyne, Senior Vice President and General Counsel of SFAA.

Surety bonds are a vital tool in safeguarding construction projects by enhancing performance, ensuring quality, controlling costs and protecting suppliers, subcontractors and workers when a contractor defaults. To learn more about the economic value of surety bonds, please click here.

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The Surety & Fidelity Association of America (SFAA) is a nonprofit, nonpartisan trade association representing all surety and fidelity industry segments. We promote the value of surety and fidelity bonding and its vital protections through advocacy, outreach, promotion, and education. The more than 425 member companies write 98 percent of surety and fidelity bonds in the U.S. SFAA is licensed as a rating or advisory organization in all states, and state insurance departments have designated it as a statistical agent for the reporting of fidelity and surety experience. www.surety.org