Williamson County contracted with Ritter Botkin Prime Construction for a public park project; Great American issued the performance bond securing Ritter Botkin's obligations, with "termination of the contract" set as a condition precedent to the surety's own obligations under the bond. On June 2, 2021, the County sent Ritter Botkin a "Notice of Termination" and simultaneously told Great American it had "terminated the contract," demanding the surety perform. Great American investigated and elected to perform under the bond, doing so from June 2 through December 23, 2021, after which the County hired a new contractor to finish the work (completed in 2023).
The County sued both Ritter Botkin (breach of contract) and Great American (on the performance bond) on August 17, 2022 -- fourteen months after its initial termination notice. Great American moved for summary judgment, arguing Government Code Section 2253.078(a)'s one-year limitations period ran from the June 2021 termination of the contract; the County argued the "contract" (which it says includes the bond) wasn't fully terminated until Great American's own performance under the bond ended in December 2021, well within the limitations window. The 480th District Court (Williamson County) denied summary judgment but granted permission to appeal, expressly inviting the Supreme Court "to give counties and cities guidance" on the issue. The Third Court of Appeals accepted the permissive appeal and affirmed 2-1; the dissent argued the majority's approach "turns a statute of limitations intended to create clarity into a fact-specific inquiry" dependent on the surety's own post-termination conduct. Rehearing and en banc reconsideration were both denied, though three of six en banc justices noted they would have granted. The Supreme Court granted review, with oral argument set for February 9, 2027.
Petitioner (Great American Insurance Company of New York): The statute's text, the governing contract and bond documents, and longstanding surety law all confirm that a public work contract is terminated -- starting the limitations clock -- when the owner terminates the contractor's right to proceed, not whenever the surety's own subsequent performance happens to wind down. The County's own contemporaneous conduct (sending a termination notice and immediately demanding bond performance) confirms it understood the contract to be terminated on June 2, 2021. Converting a clean, event-based trigger into a fact-intensive inquiry tied to the surety's post-termination conduct -- something outside the surety's control and unknowable to third parties -- will have serious negative consequences for the public construction industry statewide.
Respondent (Williamson County): The performance bond is expressly incorporated into and made part of the "public work contract," and the contract itself contemplates that it survives termination of the original contractor, since the surety's performance obligations continue afterward. Because the summary-judgment evidence shows Great American actually performed under the bond through December 23, 2021, the "contract" (broadly understood to include the bond relationship) wasn't terminated until then, meaning the County's August 2022 suit was timely. Chapter 2253 provides multiple possible limitations triggers and doesn't contain the clear legislative intent necessary to convert this into a purely legal, non-factual question suitable for interlocutory review in the first place.
Yes. The trial court itself, in granting permission for this permissive interlocutory appeal, expressly invited the Supreme Court's guidance for counties and cities on this recurring limitations question, and the panel below split 2-1 with three additional en banc justices noting they would have granted rehearing -- signaling significant disagreement even among the reviewing judges.
construction-law, insurance, civil-procedure
Permissive interlocutory appeal (Tex. Gov't Code Sec. 22.001(a)(2); Tex. Civ. Prac. & Rem. Code Sec. 51.014(d)) reaching the Supreme Court via petition for review, from the denial of summary judgment on a controlling, unsettled question of law -- not a review of a final judgment. Granted; set for oral argument February 9, 2027. Not yet decided.
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