Rivkin Radler’s Surety Group Secures Dismissal of $3.3M Performance Bond Claim

In a diversity action involving complex Georgia procedural law, a federal judge held that an obligee’s performance bond claim was untimely because the amended complaint was filed after the expiration of the two-year limitation period prescribed in the bond and did not relate back to the original pleading.

The dispute arose out of a construction project located at Moody Air Force Base in Valdosta, GA. The bond principal was terminated by the obligee on October 25, 2022. The performance bond required the obligee to commence an action under the bond no later than two years after the principal ceased working on the project.

On October 24, 2024, the obligee filed a complaint seeking $3.36 million against the surety under the bond. But the obligee never generated a summons or served the complaint. About a month later, after the limitation period under the bond had expired, the plaintiff filed an amended complaint. The surety moved to dismiss the amended complaint as untimely, arguing that under Georgia law, the original complaint did not toll the limitation period because it was never served – meaning that it was not an operative pleading to which the amended complaint could relate back. The district court agreed and dismissed the claim.

The court explained that the claim accrued no later than October 25, 2022, the date of termination, because the principal ceased working on or before the termination date; meaning, that the limitations period expired on October 26, 2024. While the obligee filed its complaint prior to the expiration of the limitations period, it never even attempted to serve the complaint on the surety. As the court explained, in Georgia, a suit is not deemed commenced on the filing date unless the plaintiff can demonstrate the pleading was 1) served within 5 days of filing or 2) plaintiff diligently attempted to perfect service. Absent such a showing, the action is deemed commenced on the date of service.

While the obligee argued that its amended complaint should relate back to the filing date of the original complaint, the court rejected that argument because the original complaint was never served and was, thus, not operative. As a result, the court dismissed the amended complaint against the surety in its entirety. Click here to view the decision.