A California appellate court has given a green light for a contractor to move forward with its bond claim against Great American Insurance Company, reviving a legal fight over nearly $690,000 in unpaid work on a public school construction project.
The ruling, handed down on May 21 by the California Court of Appeal, Second Appellate District, reversed in part a lower court decision that had tossed out all of Tarlton & Sons, Inc.’s claims. At issue is a payment bond that Great American issued for a public works project in Oxnard, where Tarlton was brought in to do framing and drywall work.
The project dates back to April 2021, when Fast Track Construction Corporation was awarded a contract by the Oxnard Union High School District to handle heating and air conditioning work at two high schools. Fast Track secured a public works payment bond from Great American, as required by California law, and subcontracted Tarlton for drywall services.
By late 2021, the project hit turbulence. The District and Fast Track had a falling out, and in November, the District brought on Viola Inc. to take over as general contractor. Tarlton signed a new subcontract with Viola on November 29, 2021, modifying its scope of work - but it never received formal notice that Fast Track’s contract had ended.
Tarlton says it kept working on the project under general contractor direction well into 2022. Meanwhile, the District continued issuing change orders to Fast Track at least through January 31, 2022.
In April 2022, Tarlton filed a claim on the payment bond with Great American, initially seeking $596,677.46. That amount was later increased to $688,353.66. Great American partially accepted the claim but required Tarlton to sign a release and waiver to receive payment. The insurer also acknowledged Tarlton’s right to pursue the rest of the claim. When the parties failed to resolve the balance, Tarlton filed suit in April 2023.
The Ventura County Superior Court dismissed the case in April 2024, finding that Tarlton had waited too long to sue. California law gives subcontractors a narrow window to bring a bond claim - no later than six months after a project’s work has ceased, or in legal terms, after a “cessation of labor.”
But the appeals court said that point hadn’t clearly been reached. While the trial court pegged November 12, 2021, as the date Tarlton stopped work under the Fast Track contract, the appellate panel noted that Tarlton alleged continued activity on the project beyond that date. The District, in fact, kept authorizing work changes well into the following year.
Whether project labor actually ceased - triggering the bond claim deadline - is a factual issue that couldn’t be decided at this early stage, the court ruled. As a result, it reinstated Tarlton’s claim for unpaid amounts under the payment bond.
The court, however, upheld the dismissal of Tarlton’s other claims, including false promise, promissory estoppel, fraud, and negligent misrepresentation. Those allegations centered on a letter from Great American stating it would pay part of the claim upon receipt of a signed release. The court concluded there was no binding promise to pay unless Tarlton signed, and since it never did, the claims lacked the necessary factual support.
This case didn’t hinge on any specific insurance policy wording. Instead, it reflects the obligations of a surety under California’s public works bond laws - a space where insurers often play a pivotal role. For insurers and contractors alike, the ruling serves as a clear reminder of how timing and documentation can make or break a claim.
