Opinion ID: 1334973
Heading Depth: 2
Heading Rank: 3

Heading: Extent of governmental liability

Text: We clarify our holding today by emphasizing that the government's liability for failure to ensure compliance with statutory bond requirements is not open-ended. The purpose of the SPPA is similar to that underlying the subcontractor's lien outlined in the mechanics' lien statute, see S.C.Code Ann. § 29-5-20 (1991), which is to protect a party who provides labor or materials for the improvement of property but does not have a contractual relationship with the property owner. Stoudenmire Heating & Air Conditioning Co., Inc. v. Craig Bldg. P'ship, 308 S.C. 298, 302, 417 S.E.2d 634, 637 (Ct.App. 1992). The subcontractor's lien, however, is not intended to create a windfall to the subcontractor. The mechanics' lien statute provides that when a subcontractor seeks to enforce a mechanics' lien against the owner of the improved property due to the general contractor's nonpayment, the owner's liability is limited to the remaining unpaid balance on the contract with the general contractor at the time the owner receives notice from the subcontractor of the general contractor's nonpayment. S.C.Code Ann. § 29-5-40 (1991); Lowndes Hill Realty Co. v. Greenville Concrete Co., 229 S.C. 619, 630, 93 S.E.2d 855, 860 (1956). Given the similar purposes behind the SPPA bond requirements for public projects and the subcontractors' mechanics' lien on private work, we hold that in a tort or contract action arising under the SPPA, the government entity's liability is limited to the remaining unpaid balance on the contract with the general contractor when the subcontractor notifies the government of the general contractor's nonpayment. This limitation, however, does not preclude the additional recovery of attorneys' fees under any applicable statute.