"The Bramble Rule:" Md. Contract law Takes a Foothold Nationally

In 2005, the Maryland Court of Appeals, in a case captioned National Union Fire Insurance Company v. Bramble, released a decision that the 45 day response time found in the 1984 AIA A312, as well as other payment bonds, requires that the surety include in its response letter (1) the amounts disputed and (2) the basis for challenging the amount in dispute. The surety company's failure to include other reasons for challenging the amounts resulted in a waiver of those defenses. In 2006, the United Stated District Court for the Eastern District of Virginia followed the reasoning of the Maryland Court of Appeals and found that the surety had waived any defense that was not raised in its response letter.

In October of 2007, the United States District Court for the Middle District of Florida also elected to follow the reasoning of the Maryland Court of Appeals, and set forth what it characterized as the "Bramble Rule:" i.e., if the surety fails to respond within the contractually required time frame, or fails to include a defense in its response, the surety thereafter waives its right to raise any defense not set forth in the response letter.

Certainly, the spread of the Bramble Rule to other States validates Maryland's requirement that surety companies must also comply with the contractual requirements created by their bonds, and will provide contractors with more protection.

For further questions, contact Matt Hjortsberg at (410) 583-2400 or at Hjortsberg@bowie-jensen.com.